Navigating the home buying process is difficult and can be frustrating. If you need help navigating the process, homebuyer education may be the right choice for you. Some lenders require a prospective buyer to go through a homebuyer education course, but even if your lender does not require it, taking the course can still be greatly beneficial to you. There are literally thousands of organizations that offer homebuyer education all over the country to choose from, and there are many courses you can take online instead of in person.
You should consider participating in homebuyer education earlier in the home buying process, ideally before you apply for a mortgage loan because the information you can learn is helpful in every stage of the process. Taking the course before you apply for a mortgage can help you better understand the process and explore more mortgage options. These courses usually take between four and eight hours to complete, though sometimes they can take longer. There are many free programs for this too, but if you end up paying for one, it usually costs between $25 and $125.
This Isn’t my First Time Buying a House, Do I Still Need This?
While these classes are mostly filled with first-time homebuyers, they can be beneficial to anyone buying a home, no matter if it is your first or fifth home. The real estate market is constantly evolving, so the information from the last time you took the homebuying class has changed somewhat. Taking the class again will get you up to date on where things are currently.
What Do You Learn?
While the way things are done at each organization may vary a little, there are standards set up by the National Industry Standards for Homeownership Education and Counseling that every homebuyer education course must follow.
You can expect a course to cover things like budgeting, credit, the closing process, maintaining a home, financing a home, shopping for a home, how to work with a real estate agent, and assessing your readiness to be a homeowner. There are also homebuyer counseling sessions you can participate in, which are on a one-on-one basis; these can help you get advice based specifically on your personal circumstances.
What Are the Benefits?
When you participate in homebuyer education, you can gain eligibility for some financial perks. These include closing-cost assistance, grants up to $25,000, down payment assistance programs, and mortgage rates that are below market. None of these are guaranteed for participating in homebuyer education, but the possibilities of them may open up to you through homebuyer education.
You can put to use the information you gain from homebuyer education courses to help make yourself more attractive to lenders when you begin applying for a mortgage loan. Proof of the course itself may not help you get the loan, but it is filled with valuable information that can help with the loan and other aspects of the process. For example, you can learn how to fix or improve your credit to get it up to the score you need in order to qualify for a mortgage loan. While that may delay your move timeline, it can be worthwhile for more aspects of your life than just buying the home.
Another valuable thing you can learn from these classes is determining what you can afford. When you are applying for a loan, your lender will look at your pre-tax income to determine how much they are willing to lend you. The problem is, this does not evaluate your take-home pay alongside your bills, food, gas, and other necessities. Homebuyer education can help you look at all of that to determine what you can truly afford.
Why is Homebuyer Education Sometimes Required?
Fannie Mae has set guidelines that first-time buyers have to complete homebuyer education and counseling in order to qualify for loans that only require three percent down payments. If someone is receiving government aid, they usually have to participate in homebuyer education.
For someone who is relying on nontraditional credit to qualify for their loan, counseling is usually required, even if this is not their first time buying a home.
After you complete the education, you receive some sort of documentation that you did it, which you can give to your lender as proof of completion.