If you are a first time home buyer and need a better understanding of all the ramifications of home buying and home owning, there may be a class for you. Many local groups provide counseling or classes devoted to personal finance, and home buying is a major component of personal finance. You can ask a realtor, or you can do an online search with the words “home buying classes” and your city or town name.
These classes should be free, and they will range from a couple of hours to a couple of days. They may be sponsored by a realtor, or by a park district, YMCA, or some other institution with a stake in the local community.
While many home-counseling organizations are geared toward low and moderate income families, don’t let that deter you from seeking their services. Pride matched with ignorance can be mighty expensive given the scale of investment and complexity of the transaction to buy the home and obtain a home mortgage. Some consumer advocates would like to see home-buyer education a requirement for every first-time home buyer before they sign a purchase contract or complete a home loan application.
Indeed, studies show that consumers who meet with housing counselors and seek home-buyer education have a higher success rate as home owners. According to a study that analyzed 40,000 mortgages originated under Freddie Mac’s Affordable Gold program, the group of borrowers who received individual counseling had a 34% lower mortgage delinquency rate than those who didn’t.
What should you look for? Most nonprofit organizations offer a free eight- to 10-hour class that walks consumers through the entire home-buying process, from the nuances of mortgage underwriting (including the debt to income ratios lenders use to determine how much money to lend) to the difference between an interest-only mortgage and a 30-year fixed-rate product and various other mortgage products and mortgage rates.
Of course, there’s more to buying a home than just the financing process. That’s why counselors also teach about the importance of home inspections and offer basic budgeting guidelines, including how much money to set aside for basic upkeep of the property.
Typical material in such a class covers some of the following topics.
Getting a home loan.
What you should know about credit scores and credit reports.
How to begin the search for a home.
How to determine what price to offer.
Getting the seller to pay closing cost for the home mortgage.
What to investigate before buying a new home.
How to find information that could affect the value of your investment.
How to investigate the location.
How to avoid some common mistakes.
The home mortgage closing process.
The settlement statement including settlement differences for different loans.
The role of your real estate agent.
Finding the right home loan for you including mortgage loans and mortgage refinances.
Another benefit of meeting with a housing counselor is that he or she can sort through vast databases to see if you qualify for any of the down payment assistance programs available in the area. While many of them are limited to people with low to moderate incomes, that’s not always the case. Areas trying to revitalize certain neighborhoods might waive income limits entirely. So even if you don’t think you have the time for a full eight-hour class, it pays to lob in a phone call to see what programs are available or any mortgage rate assistance.
As part of the education process read the various articles on bank mortgage guidelines and products and use the mortgage calculators as well as the mortgage payment calculators to help better understand the loan process and the costs involved.
Tags: bank mortgage, credit reports, credit scores, home buyer, home loan, home mortgage, loan, mortgage, mortgage calculators, mortgage payment calculators, mortgage rates, mortgage refinances
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