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Tackling What First-Time Home Buyers Need to Know with David Gulbransen, Ep #61

What does the home-buying process look like? How do you navigate interest rates? What type of loan best suits your needs? These are just a few of the questions David Gulbransen is uniquely qualified to answer.

David is a loan officer in Northern California whose focus is providing the best communication, service, product knowledge, and transparency to his clients and partners. His hands-on approach quickly forms a comfortable relationship and leads to a stress-free lending process.

In this conversation, David tackles common questions that new homebuyers ask in a way that everyone can understand.

You will want to hear this episode if you are interested in…

What the Process Looks Like for New Homebuyers

David sits down with prospective clients to understand their goals and current financial situation to develop a roadmap together. After they complete an application detailing pertinent information, he compiles their loan options and shares them (first-time homebuyer loans, down payment assistance programs, and more).

David will provide a pre-qualification letter they can use to begin home shopping. After that, they move into the pre-approval phase where documents are collected (income verification, asset verification, etc.) which moves to underwriting.

Tips to Get Your Finances in Better Shape for a Home Purchase

If someone’s credit needs work, David makes recommendations for improvement and helps them enlist third-party companies to assist them with credit repair. Other buyers need to create a savings plan to reach what they need for a down payment. There are two things every new homebuyer needs to do:

  1. Know your credit situation: AnnualCreditReport.com will give you your FICO score and share any negatives that you can address to improve it. The higher your FICO, the better your interest rate.
  2. Plan to save 8–9% of your purchase price. This covers a small down payment, title and escrow fees, and closing costs.

I recommend clients target a 20% down payment whenever possible when purchasing a home. A 20% down payment not only creates an immediate equity position but removes the need for private mortgage insurance (PMI).

Where Are Interest Rates Headed?

Mortgage interest rates tend to correlate with the Fed rate. The Fed has announced that there will be a rate reduction in Quarter 4 of 2024. Interest rates have been trending down over the past 4–6 weeks. The expert outlook is that there will be continued softening.

But David emphasizes that interest rates should rarely dictate whether or not you purchase a home. It’s impossible to time interest rates. If you find the home you love, make the purchase. Why? After six months of payments, you have the opportunity to refinance for a small fee (which can often be rolled into the refinance loan).

Listen to hear how else you can mitigate interest rates to purchase your first home.

How Much House Can I Afford?

I suggest keeping housing expenses to less than ⅓ of your take-home pay. If your take-home pay is $10,000 per month, you can afford a house where your obligations are less than $3,333 per month (this includes principal, interest, taxes, and insurance).

You must also consider homeowners’ association fees and potential maintenance, keeping in mind that a more expensive house will require more maintenance. I always suggest you save 1% of your home’s value every year for deferred maintenance.

Resources & People Mentioned

Connect with David Gulbransen

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Audio Production and Show Notes by – PODCAST FAST TRACK

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