Homeownership is one of the pillars of American prosperity, bringing financial stability to individuals families. But when it’s approached recklessly and irresponsibly, it can be a burden.
To help reduce financial risk to both borrowers and lenders, many loans are offered with homebuyer education. Depending on the program and the borrower, this education could be optional or mandatory. No matter what, it’s always a helpful resource for buyers from all walks of life.
Homebuyer Education: Essential Information for Every Upcoming Homebuyer
What is Homebuyer Education?
Homebuyer education is a series of short courses that can be taken in a formal classroom setting or at home through an online program. It may be required by some mortgage companies, while it remains optional for other programs. The length of the course will vary depending on the program, but most are, in total, less than five hours. They can often be completed in a couple of days, although some people take a week or more to complete the training.
For example, Fannie Mae’s Homeownership Education takes roughly four hours from start to finish.
In this education, you will learn about many different aspects of the home-buying and borrowing process, including:
- The Home Purchasing Process: During the course, you will be given an overview of the entire home-buying process, which will include the application for a mortgage and closing the deal. The class will explore each phase in depth, giving you a clear idea of how the purchase will be completed.
- Budget Tips: Because buying a home is likely the largest purchase you will ever make, budgeting will be important. The class will show you how to estimate the amount you should spend and will help you understand the additional and often forgotten expenses involved in owning a home.
- Mortgage Information: There are many different mortgage products available, so the course will review the different options to help you understand the positives and negatives for each one. The education will also review qualifications and the application process for mortgages.
- Home Maintenance: As a renter, home maintenance is usually as easy as calling the landlord. As a homeowner, you need to understand how to deal with certain home maintenance situations, as well as budgeting for the cost of home repair services and routine maintenance like duct cleaning.
- Real Estate Agents: You need to understand the process of working with a real estate agent, as well as the standard payment process for purchasing a home. (FYI: The seller generally pays the real estate agent’s commission.)
- Conserving Energy and Resources: The mortgage is only a part of the overall cost for homeownership. Most classes will also review other expenses, such as water, heating, cooling, waste disposal, and other utilities. At the end of the class, you will have a general idea on how to conserve resources, which will save money every month.
- Home-Buying Assistance Programs: There are numerous resources available to homebuyers, but many people don’t know what they are or how to access them. This class will review various assistance programs, especially down-payment assistance, which is offered through some municipalities, grant programs, and non-profit organizations.
- Credit: Many courses will review the role of credit in the mortgage-loan process. They will often include information on how your score is calculated and what you can do to improve your credit.
When Do You Have to Take Homebuyer Education?
Although virtually any homebuyer can take advantage of this educational opportunity, it is generally used by first-time homebuyers. In fact, it may be required by many organizations for people who have never purchased a home. Some organizations will also require the course if you have not owned a home in three years or more.
For Fannie Mae’s HomeReady program, at least one borrower on the account must complete the training, which is available in both English and Spanish.
However, even if it is not required, it’s a great idea to take some form of homebuyer education, as it will make your ownership experience far more rewarding and less stressful.
Can You Complete Homebuyer Education Online?
Yes, many of the programs are offered completely online, although you may be able to take in-person classes under certain settings. Taking online courses enhances the convenience of the program, as you can wrap the education around your busy schedule. However, taking classes in person allows you to engage with the subject matter and ask questions to trained instructors.
How Much Does it Cost?
There are literally thousands of organizations across the country that offer homebuyer education, so the price of the training can vary widely. However, you will generally find the course costs about $75 to $100. Fannie Mae’s, for example, costs $75.
It May Be Beneficial to Take the Class Before Shopping for a Home
While you should certainly take the class before final delivery of the mortgage, it’s often beneficial to take the class before you even shop for a home. In many cases, it should be the very first thing you do. The class will cover different aspects of purchasing a home, including working with real estate agents, choosing a mortgage, and finding assistance programs; if you wait until you’ve found a home, it will be too late to use most of this information. Having the education allows you to be a more confident homebuyer, which will only result in a better buying experience and a better purchase for your needs.
Consider One-on-One Counseling in Addition to Education
In addition to the online or in-person classes, you could also enroll in one-on-one counseling. Once again, this is likely the best choice if you have never purchased a home, as it will give you the advice and support you need, but in this case it will be tailored to your specific needs. With counseling, you’ll be even more informed and confident when you start searching for your house.
Get the Right Mortgage with Service and Support
If you are ready to find the right mortgage for your needs, contact San Diego Purchase Loans. By taking a common-sense approach to mortgage underwriting, we are able to increase your chances of approval on a high-quality loan!
“Hi Juliann and Chad, I wanted to take a moment and thank you guys for what would have been impossible for us to do without you. We wouldn’t have our keys in hand if it had not been for your help in navigating the financing, and Juliann’s perseverance in getting the rest of the players in the transaction to deliver. Out of everything, our interaction with your office has been a highlight – and your customer service has been beyond everything we’ve experienced in the real estate industry. Is there a way we can provide any reviews, ratings, testimonials, or other statements that can express to your potential future customers how much you guys do to make the customer’s life easy? Please let us know how we can share our great experience with you to the rest of the public. Whether we refinance this under a VA, or get in a bigger/better house in a few years, we’re not going to go anywhere else for financing. We are customers of yours as long as you are in business. Thanks again for getting us in a house!”
“We’re loving our new place and we’re very pleased with how smoothly everything went through closing. Thanks for keeping us up to date on the possibility of refinancing at a lower rate; we trust your judgement as far as waiting until the rate is around 5% lower before we refinance. We’re very interested in pursuing that if rates drop to that level. Thanks so much for all your help and personal attention!”
“Chad and his group made the mortgage approval process smooth and understandable. Multiple updates and explanations during the process kept me informed of progress. Chad also provided great advice on other home services, in particular an insurance company that saved me thousands of dollars a year on home and auto insurance.”