Are you getting ready to buy your first home? Maybe you bought a home in the past but fell into financial and credit troubles because you weren’t quite ready for the responsibilities of homeownership. Either way, taking a homebuyer education course is a positive and rewarding step towards responsible homeownership.
A homebuyer education course can prepare you for the total cost of homeownership when it comes to mortgages, maintenance and more.
What is a homebuyer education course?
Many mortgage lenders, nonprofit credit counseling agencies and local or national housing groups offer homebuyer education courses for consumers. You may be able to take a homebuyer course online or in person, depending on how and where the course is offered.
Some lenders even require first-time homebuyers to complete a homebuyer education course before applying for a mortgage. For example, Fannie Mae requires most first-time homebuyers to complete and pass its free Homeview online course to qualify for certain mortgage programs and a lower down payment requirement.
Freddie Mac also requires some borrowers for its HomePossible mortgage loan to pass a homebuyer education course on a mortgage before the note date.
Taking a homeownership education course can help you determine if you’re financially prepared to buy a home. You’ll also learn how to save for a down payment and homeownership, the ins and outs of the mortgage process and how to choose and work with a real estate agent.
“Providing access to tools and information helps create a well-informed borrower with a clearer understanding of their housing needs and household budget, allowing them to confidently move through the homebuying process,” according to Fannie Mae.
Find out: An Introduction to Mortgages and Homebuying
4 benefits of completing a homeownership course
1. Gain a better understanding of homeownership
You may think you’ve studied up on homeownership enough to begin your home search. But there’s a good chance you may not fully understand all the costs and responsibilities of homeownership.
When you own a home, your monthly mortgage payment is just one cost. Taking a homebuyer education course can help you understand and plan for all the costs of owning a home, including property taxes, homeowner’s insurance and home maintenance.
Find out: 8 Homebuying Mistakes to Avoid
2. Know the steps of the homebuying process
The process of buying a home can be confusing and intimidating if you throw yourself into it without understanding how the homebuying process works. A real estate agent can help you understand the process.
But you also need to learn about the homebuying process from a source that doesn’t have a stake in how much you spend on a home or the type of mortgage and terms for which you apply. That way, you approach homebuying as an informed consumer equipped to make the best financial decisions.
Find out: 10 Money Strategies for Buying Your First Home
3. Qualify for a lower down payment
When you complete a homebuyer education course, you may qualify for a lower down payment on certain mortgage loans. For example, Fannie Mae offers a three percent down payment requirement on its HomeReady mortgage loans if at least one of the first-time homebuyers on the loan takes a homebuyer education course.
Find out: How to ACTUALLY Buy a Home
4. Learn how to choose a lender and apply for a mortgage
Mortgage lenders have a large stake in making a profit and may steer you towards a longer loan or other loan terms that will cost you tens of thousands of dollars more than you’d pay on a shorter loan term.
A homebuyer education class will show you the math on how much more you’ll pay with a 30-year mortgage over a 15-year mortgage. You’ll also learn what to expect with the mortgage application and approval process.
Find out: How to Buy a House with Bad Credit
How to find a homebuyer education course
Lenders that require first-time homebuyers to take a homebuyer education course typically require that the course is offered by a HUD-approved housing counseling agency and/or one of the following:
- Housing finance agency (HFA).
- Other qualifying homebuyer education courses may include those offered by:
- Community development financial institutions (CDFI)
- Mortgage insurance companies
- Other programs that meet the National Industry Standards for Homeownership Education and Counseling
Even if your lender doesn’t require a homebuyer education course, you’ll still benefit from educating yourself about the homebuying process before you apply for a mortgage loan. And your education investment won’t take that long or cost much, either.
Many homebuyer education courses are free or cost under $100 and can be completed in under ten hours or during a one-day workshop.
To find a homebuyer education course near you, search for a HUD-approved housing counseling services agency with this directory at the Consumer Financial Protection Bureau. A housing counselor can direct you to a HUD-approved homebuyer education course.
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