About homebuyer training courses
If you are applying for down payment assistance, you may need to take a homebuyer course.
The same goes for many initial home buyer loans.
Homebuyer training courses teach the basics of home ownership – from comparing home loan interest rates to getting your new home.
Knowing this can save you money, and completing a mandatory homebuyer education can make you a homeowner sooner.
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In this article (continue to …)
Classes For First Time Home Buyers And Their Benefits
Taking part in a first-time buyer course not only provides you with textbook knowledge. It can also help you qualify for cheaper loan programs.
Loan programs that require homebuyer education are generally aimed at first-time home buyers. These programs are designed to help first-time buyers overcome barriers such as lack of savings or lower income.
Completing a homebuyer education can provide many benefits, including:
A lower down payment requirement; A way to qualify with lower income or credit; A way to use roommate or rental income to qualify for the loan
The time you spend in a first-time buyer can pay off and pave the way for you to own your home.
Where can I find programs for first-time home buyers?
So how do you find one of these first-time buyer programs?
If you're not sure where to start, ask your real estate agent or loan officer about nonprofits, housing advice agencies, or local government programs in your area.
But chances are you will be found in a homebuyer course if you apply for a mortgage loan that is designed for first-time home buyers.
For example, Fannie Mae and Freddie Mac, the two mortgage giants who buy loans from most mortgage lenders, have incorporated homebuyer education into their first-time home loan programs.
Depending on your down payment amount, you can get homebuyer training with these programs:
Freddie Mac Home Loans: 3% deposit, roommate rent counts towards your income, your deposit can be 100% gift credit, can qualify with no credit, does not have to be a first-time buyerFreddie Mac Home One Loan: 3% down payment, at least one borrower must be a first-time buyer, can buy with the income of the co-borrower, no income limitFannie Mae HomeReady (Class required for at least one borrower in the application): 3% down payment, tenant or pension income can be offset, down payment can be 100% gift credit, can qualify without creditworthiness
If you want to take advantage of a loan program that requires homebuyer education, there probably isn't much you need to do.
The courses mentioned earlier and many others are available online for free.
Note: To enroll in Fannie Mae's Framework Course for free, you must access it through one of the specific links on Fannie Mae's website. Otherwise, you will be charged a non-refundable fee of $ 75.
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Other ways of accessing homebuyer training courses
Some homebuyer education courses are taught in classrooms and require instruction. The eHomeAmerica website allows users to search for local classes.
Due to the pandemic, some face-to-face courses have been converted to online courses or webinars.
Regardless of the format, taking any of these courses is likely well worth your time.
“Today's consumer wants to be informed. That's why educational programs like this can empower the buyer, ”said David Mele, president of Homes.com.
“And research has shown that those who take home ownership training are better able to find the information they need about the process. It helps them find a home within their budget and suitable funding options. "
Free homebuyer training courses
Homebuyer education courses often charge an out-of-pocket tuition fee of $ 75 to $ 125. Or, your lender can pay the cost and add it to the loan fees you pay on completion.
It is possible to find free homebuyer training courses. However, different education providers have different standards. Your lender may not accept the course you took, even if you have a certificate of completion.
For the best results, ask that your course meets national industry standards before enrolling.
Or check if the course from U.S. Department of Housing and Urban Development (HUD) is accepted. A HUD-approved class will meet the educational requirements of most homebuyer lenders.
Even if you have to pay $ 75 or $ 100 out of pocket, your investment can pay off exponentially with the class unlocking down payment assistance, tax credits, or a loan program that suits your specific needs.
When is homebuyer training required?
Mortgage loans that are specifically designed for first time home buyers sometimes include homebuyer education as an eligibility requirement.
This is almost always the case with borrowers in need of a closing expense or down payment assistance grant or loan.
Some home loan programs, such as B. Freddie Macs Home Possible, only require a homebuyer training if this is your first time home buying. Repeat buyers do not need the course.
Lenders and loan programs require these in-person or online courses because they have found a link between education and foreclosure prevention.
In short, the more homebuyers know about how mortgages work – for example, interest rates, mortgage insurance, home equity – the less likely they are to default.
The good news for borrowers is that a few hours of classes can translate into cheaper housing options.
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What is a First-Time Home Buyer Course Teaching?
Let's look at an example.
Freddie Mac's online homebuyer training course is called CreditSmart Homebuyer U. It is ideal for first-time buyers.
This online course offers 12 educational modules. Each highlights an important concept that you need to understand when purchasing a home. These include:
Getting a MortgageLoan and How It Affects MortgagesThe Home Buying ProcessSmart Money ManagementMortgage PaymentsMaking Home Ownership and Home Equity
The modules are offered in English or Spanish. They make difficult concepts easy to understand with bullets, graphs, and calculators to experiment with. And they contain important definitions and tips in user-friendly language.
Mele says he's impressed with Freddie Mac's CreditSmart Homebuyer U program.
"It's supposed to simplify the process so that buyers not only have the right information, but also know how to use it," says Mele.
“For example, prospective buyers don't know how to take advantage of lower down payment options. And it is not clear to many how these options can cut down the time it takes to save a deposit.
"Courses like this, coupled with working with a realtor, will provide buyers with a comprehensive framework to build on and retain the credit they need for their home," continues Mele.
> Related: Loan options with low and no down payment
Why Education Is Important to Homebuyers
Those who skip initial homebuyer education are missing out on some of the unique loan types outlined above. It might be more difficult to qualify for a loan or raise the funds required – which are higher with non-specialized loan programs.
Also, the experts say, your home purchase may not go as smoothly.
“This could lead to potentially stressful home buying and owning,” warns Mele.
“And that could lead to rising debt and lower creditworthiness. Also, there may be a higher chance of a mortgage default. "
To support this point, a study by Freddie Mac showed that almost one in four people in their prime (24–38) felt “not at all sure” about how to avoid foreclosure.
Lack of home ownership education "could also prevent you from making the leap from renting to owning," said Bruce Ailion, realtor and attorney.
Buying a home isn't as difficult or expensive as many people think. But to get started, you need the correct information in your toolkit. A homebuyer class gives you that power.
What the experts say about homebuyer education
Lawrence Yun is the Chief Economist for the National Association of Realtors. He supports Freddie Mac's first-time buyer class and the like.
“The education of the public about the advantages and above all the responsibility of owning a home is good all round. It is good for lenders to reduce loan default rates. And it's good for consumers so they can make more informed financial decisions, ”explains Yun.
To be more successful, buyers should know what to expect. Ailion thinks so.
“Understanding the buying process, the financing process, and the responsibilities of the owners is critical,” notes Ailion.
“There are hundreds of thousands of tenants wanting to buy. But they don't understand what it is about or how to achieve that goal. CreditSmart is an efficient way for consumers to start this journey. "
Leslie Shull is an Assistant Professor of Real Estate at Sacramento City College.
“I'm a fan of educational models for borrowers or buyers that involve lending and budgeting. And the multilingualism of the course is enormous. They make it accessible to a wider audience, ”she says.
Buying a home is easier than you think
Buying a home may seem expensive and difficult to understand. But if you take it step by step it is absolutely doable.
A first-time home buyer course can help a lot. You will receive the know-how you need to find the right loan for an affordable mortgage payment.
And if you take the right course, you can even save your down payment and graduation costs. Have a look around and ask your lender about options for first time home buyers to find the best one.
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