Mortgage FAQ
Answers to the questions homebuyers and homeowners ask most. Click any question for a detailed explanation.
Reverse Mortgage
Who Qualifies for a Reverse Mortgage in Washington?
To qualify for a reverse mortgage (HECM) in Washington, at least one borrower must be 62 years of age or older, the home must be your primary residence, and you must have substantial equity — typically 50 percent or more. Eligible properties include single-family homes, HUD-approved condominiums, FHA-approved manufactured homes, and two-to-four-unit properties where you occupy one unit. Lenders also conduct a financial assessment to confirm you can continue paying property taxes, homeowner's insurance, and maintenance. Before closing, HUD requires every applicant to complete an independent counseling session with a HUD-approved counselor. As a Washington-licensed loan officer, Joshua Donion can walk Seattle-area homeowners through eligibility and estimate how much equity they can access.
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Is a Reverse Mortgage a Good Idea?
A reverse mortgage can be a good idea for homeowners 62 and older who have significant home equity, plan to stay in their home long-term, and want to eliminate their monthly mortgage payment or supplement retirement income. It is most beneficial when used as part of a deliberate retirement plan — for example, establishing a growing line of credit, delaying Social Security, or covering healthcare costs. It is generally a poor fit if you plan to move soon, if heirs need to inherit the home free and clear, or if you may struggle to keep up with property taxes and insurance, since those obligations remain. Because a HECM is FHA-insured and non-recourse, you or your heirs will never owe more than the home is worth. The right answer depends on your goals, so an honest, no-pressure review of the pros and cons with a licensed advisor is the best first step.
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Divorce Lending
How Do I Refinance My Mortgage After Divorce in Washington?
Refinancing after a divorce in Washington removes your former spouse from the mortgage and transfers full ownership to the spouse keeping the home. The retaining spouse must qualify for the new loan on their own income, which can include court-ordered alimony or child support if it is documented in the decree and expected to continue for at least three years. A cash-out refinance is often used to fund an equity buyout — pulling out enough equity to pay the departing spouse their share of the home's value. Timing matters: Washington is a community property state, so coordinating the refinance with your settlement timeline and the language in your decree is critical. As a Certified Divorce Lending Professional (CDLP), Joshua Donion structures the refinance so it aligns with your settlement and protects both parties.
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Can I Assume a Mortgage in a Divorce?
Sometimes. If your existing loan is FHA, VA, or USDA — or a conventional loan that contains an assumption clause — one spouse may be able to assume the mortgage in a divorce and keep the current interest rate. This is especially valuable when today's rates are higher than your existing rate, because a refinance would reset you to the higher market rate. A mortgage assumption still requires the remaining borrower to qualify on their own income and to obtain a release of liability so the departing spouse is removed from the debt. Not every loan is assumable, and lenders handle the process differently, so the first step is confirming whether your specific loan qualifies. Joshua Donion, a Certified Divorce Lending Professional, can review your loan, confirm whether assumption is an option, and coordinate it with your attorney and settlement.
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Qualification
What Credit Score Do I Need for a Mortgage?
Most conventional mortgage programs require a minimum credit score of 620, though a score of 740 or higher will qualify you for the best interest rates available. FHA loans are more flexible, accepting scores as low as 580 with a 3.5 percent down payment, or even 500 with 10 percent down. VA and USDA loans do not have a government-mandated minimum, but most lenders look for at least 620. Keep in mind that your credit score also affects your interest rate and mortgage insurance costs, so improving your score before applying can save you thousands over the life of the loan.
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How Long Does Mortgage Approval Take?
The typical mortgage process takes 30 to 45 days from application to closing, though some loans can close in as few as 21 days with a responsive borrower and smooth underwriting. Pre-approval itself usually takes one to three business days once all documents are submitted. The longest portions of the timeline are usually the appraisal, which can take one to two weeks, and underwriting, which takes another week or more. Staying organized with your paperwork and responding quickly to lender requests is the best way to keep the process on track.
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What Documents Do I Need for a Mortgage?
You will need to provide proof of income, which typically includes your two most recent pay stubs, W-2 forms from the past two years, and federal tax returns. Lenders also require bank statements from the last two to three months to verify your assets and down payment funds. You will need a valid government-issued ID and your Social Security number for the credit check. If you are self-employed, expect to provide additional documentation such as profit and loss statements and possibly a letter from your CPA.
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Costs
How Much Down Payment Do I Need?
The required down payment depends on the loan type. Conventional loans typically require as little as 3 to 5 percent down, while FHA loans require just 3.5 percent. VA and USDA loans offer zero down payment options for eligible borrowers. Putting 20 percent down allows you to avoid private mortgage insurance on a conventional loan, which can save you $100 to $300 or more per month. Down payment assistance programs are also available in many areas and can help cover part or all of your down payment.
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What Is PMI and How Do I Avoid It?
Private mortgage insurance, or PMI, is a monthly premium charged on conventional loans when you put less than 20 percent down. It protects the lender, not you, in case you default on the loan. PMI typically costs between 0.5 and 1.5 percent of the loan amount per year, added to your monthly payment. You can avoid PMI by making a 20 percent down payment, choosing a VA or USDA loan which have their own fee structures, or requesting PMI removal once you reach 20 percent equity in your home.
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What Are Closing Costs?
Closing costs are the fees and expenses you pay when finalizing a mortgage, typically ranging from 2 to 5 percent of the loan amount. They include items such as appraisal fees, title insurance, origination fees, attorney fees, recording charges, and prepaid items like homeowners insurance and property taxes. On a $400,000 loan, you can expect closing costs between $8,000 and $20,000. In some cases, closing costs can be negotiated with the seller, rolled into the loan, or reduced through lender credits in exchange for a slightly higher interest rate.
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Loan Types
Fixed Rate vs Adjustable Rate: Which Is Better?
A fixed-rate mortgage locks in your interest rate for the entire life of the loan, giving you predictable monthly payments that never change. An adjustable-rate mortgage, or ARM, offers a lower initial rate for a set period, typically 5, 7, or 10 years, after which the rate adjusts periodically based on market conditions. Fixed rates are ideal if you plan to stay in the home long-term and want payment stability. ARMs can be a smart choice if you plan to sell or refinance before the adjustable period begins, since you benefit from the lower initial rate without the risk of future increases.
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What Are FHA Loan Requirements?
FHA loans are government-insured mortgages designed to make homeownership more accessible, especially for first-time buyers. The minimum credit score is 580 for a 3.5 percent down payment, or 500 with 10 percent down. Your debt-to-income ratio should generally be below 43 percent, though some lenders allow up to 50 percent with compensating factors. FHA loans require both an upfront mortgage insurance premium of 1.75 percent and an annual premium that is split into monthly payments. The property must also meet FHA appraisal standards for safety and habitability.
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Who Is Eligible for a VA Loan?
VA loans are available to active-duty service members, veterans, National Guard and Reserve members, and certain surviving spouses. To be eligible, you generally need at least 90 consecutive days of active service during wartime, 181 days during peacetime, or 6 years in the National Guard or Reserves. You will need a Certificate of Eligibility, which your lender can help you obtain. VA loans offer significant benefits including zero down payment, no PMI, competitive interest rates, and limited closing costs, making them one of the most powerful mortgage benefits available to those who have served.
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