Buying a home can be confusing and emotional, especially for first-timers. It's a huge expenditure - the largest many folks will make in their lifetime.
There's a lot of information to review and plenty of documents to sign. And, at times, it's can become hard to tell who's working for whom.
It's not surprising that Fannie Mae's recent study about mortgage knowledge reveals consumers are confused by the requirements and unfamiliar with resources that can help them.
That doesn't have to be the case. Expert help is available, and may be closer and less costly than you think.
Best kept secret
"The availability of high-quality and independent professional housing advice could be the best-kept secret in the industry," says Joe Weisbord, a director in Fannie Mae's single-family business who works on access to credit.
He's talking about HUD-approved, non-profit housing counseling agencies that offer homeownership advisers to help you - sometimes for a fee, usually less than $200. The counselors help you decide the right time to buy, develop budgets, strengthen credit, find down payment assistance, and prepare for the challenges of owning a home.
The importance of going into a home purchase with knowledge can’t be understated. A study of the two-year loan performance of more than 18,000 pre-purchase counseling clients from the NeighborWorks America's network shows promising results.
They found that clients who received counseling were one-third less likely to become 90 or more days delinquent in the two years since obtaining their loan when compared to similar borrowers who did not receive pre-purchase counseling.
Counseling is catching
The industry is taking notice and looking for ways to reach more borrowers and provide them with the information they'll need to understand the transaction and be successful homeowners.
Fannie Mae requires at least one borrower on its HomeReady mortgage to complete the Framework Homeownership pre-purchase course, or an equivalent course. Fannie Mae also offers closing cost incentives to first-time buyers of REO properties who complete the course.
Wells Fargo recently announced yourFirstMortgage, an affordable mortgage product that offers an interest rate reduction to borrowers who complete an education course and whose down payment is less than 10 percent.
All are welcome
So if help with buying a home is readily available, why aren't phones ringing off the hook?
Put simply, many buyers are unaware of the programs, or think housing counselors only help low-income home buyers or those facing foreclosure. "That's just not the case," says Simone Griffin, vice president of affiliate relations at HomeFree-USA.
"We offer value to every home buyer. Some will want us to just review their loan documents and go on their way. Others will need to work with us longer term because they have multiple credit issues and may not be ready to buy," she explains.
3 reasons to have an adviser
With that in mind, here are three reasons you'll want a homeownership adviser on your side:
- They are your advocate. A homeownership adviser isn't part of the transaction to sell you a product or service. "They are independent professionals who are on your side,” says Weisbord. “The advice they provide will be in your best interest."
- They know things you don't. Homeownership advisers work in the industry every day and know about down payment and other assistance programs available for eligible buyers. Some agencies, including HomeFree-USA, even renovate homes to sell to clients who've completed their course who will become owner-occupants, says Griffin.
- They want to stick around. Homeownership advisers work to develop ongoing relationships with clients who may upsize, downsize, refinance, or start to struggle with their mortgage.
"One of the most common remarks from our customers is 'I wish I'd taken the course earlier in the process,''' says Danielle Samalin, president of Framework. "We're looking for more ways to reach home buyers earlier in the process and to stay connected with them long after they've closed."
Related:
- Down Payment Savings Tips for Renters
- Renting or Buying a Home: Which is Best for You?
- 5 Mortgage Misconceptions Set Straight
Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.
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