Feel like the home-buying process is a complete mystery? Does it seem like everyone else knows what they’re talking about and you’re totally confused? Kip’s got you covered- follow along as he walks us through all the steps of buying your first home.

Step 1: Mortgage Preapproval

It seems backward, but before you start looking for that dream home, your very first step isn’t with a Realtor- it’s to get preapproved for your mortgage. Kip says there are 3 big reasons why a mortgage preapproval has got to be your first step in the home buying process:
- it sets your budget
- it gives you an idea of what your monthly mortgage payments will be
- it locks in the best mortgage rate available for 4 months

Mortgage interest rates are on the rise, and your mortgage interest rate makes a big difference to your monthly payments. Kip breaks it down with an example based on a home purchased for $300,000:

In May 2021:
5 year fixed interest rate was about 2%
On a $300k home, your monthly mortgage payment was $1270

Now, one year later- for a home of the same value, with the increase in fixed mortgage rate:
Interest rate is about 4.15%
Monthly mortgage payment is $1602

Rates will continue to rise, but a mortgage preapproval means you can get the best rate available today and hold it up to 120 days (4 months) This takes some of the uncertainly out of the house buying process!

Many people go to their local bank to get a mortgage, but Kip’s advice is to meet with a mortgage broker- mortgage brokers work with a wider range of lenders, and tend to be able to get you other value-added features as well.

Bottom line: to start your home buying process, the first thing to do is get your mortgage preapproved with a local mortgage broker. If you’d like to chat with Kip about making that step, give us a call! We’re always ready to help.