A Crash Course
How well do you really understand the homebuying process? Taking a qualified homebuying class will do more than teach you how to get a mortgage or pull together a down payment. It will help you determine the amount of home you can afford without endangering other lifetime financial goals.
If you think this training is just for first-timers, think again. Real estate markets change, and so do homebuying environments. It is worth considering taking a class each time you’re making a home purchase, especially if it has been a significant number of years between purchases. The homebuying class can keep you up to date on what you’ll need to know this time around.
Where can you find these courses? Many private lenders offer their own training, but governments – local, state and federal – are the main source for instructional classes for homebuyers. In fact, on both the public and private side, these classes are often tied to special loans or funding assistance for the qualified.
Most homebuyer trainings are free – if you’re asked to pay, get an explanation for what those costs cover.
The U.S. Department of Housing and Urban Development (HUD) provides a list of approved state (http://portal.hud.gov/hudportal/HUD?src=/buying/localbuying) and local agencies (http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm) that offer a range of homebuyer education options – some even help first-time buyers obtain grants and other financial assistance with their down payments. HUD has backed up this effort with additional funding (http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2016/HUDNo_16-022) this year.
The Department of Veterans Affairs (VA) and Department of Agriculture (USDA) also offer assistance and educational programs for qualified buyers. Meanwhile, Fannie Mae and Freddie Mac (https://www.fanniemae.com/content/faq/home-buyer-education-policies-faqs.pdf), the two government-sponsored agencies that keep mortgage funding flowing through our lending system, also support their own homebuyer education options. In fact, a 2013 Freddie Mac study (http://www.freddiemac.com/news/blog/robert_tsien/20130415_getting_better.html) indicated that pre-purchased financial counseling may cut the likelihood of a first-time homebuyer becoming seriously delinquent by nearly 30 percent.
If you have your eye on particular lenders in your community, call them to see whether homebuying education can be a helpful factor in getting approved for a loan. Ask them to explain how they evaluate such training and what courses they recommend. Always ask whether any homebuyer class has a fee and why. Also, get a second opinion – if you work with a qualified financial professional, ask what he or she thinks about the course and its benefits.
As you consider such a course, don’t think narrowly about what you can get out of it. It’s not just about getting the mortgage. It’s a chance to ask about how a home purchase may affect other aspects of your financial life – all personal finance goals should be considered equally.
Bottom line: Since the mortgage industry collapse in 2008, it’s been a new day in residential homebuying. Whether you’re buying your first home or beyond, taking a homebuyer education class can help you understand the mortgage process, improve your credit and shop smarter for a home you can actually afford.
Nathaniel Sillin directs Visa’s financial education programs. To follow Practical Money Skills on Twitter: www.twitter.com/PracticalMoney.