Learning about mortgage and homeownership costs before you buy can save tens of thousands of dollars over the years.

3 minute read

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:

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.

Find out: Everything You Need to Know About the Housing Market

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About the Author

Deb Hipp

Deb Hipp

Deb Hipp is a full-time freelance writer based in Kansas City, Mo. Deb went from being unable to get approved for a credit card or loan 20 years ago to having excellent credit today and becoming a homeowner. Deb learned her lessons about money the hard way. Now she wants to share them to help you pay down debt, fix your credit and quit being broke all the time. Deb's personal finance and credit articles have been published at Credit Karma and The Huffington Post.

Published by Debt.com, LLC