June is National Homeownership Month – a great time to focus on how high-quality homeownership education and housing counseling can help expand the pool of mortgage-eligible buyers. Often, homeownership education is viewed by buyers as just another hoop to jump through during an already stressful time. And, for some loan officers, it’s seen as a requirement that can delay a loan closing.
But the need for knowledge is real. When Fannie Mae surveyed consumers, we learned that about half were unable to answer questions about key mortgage qualification criteria. And our recent qualitative study revealed that consumers agree that homeownership education is helpful and they believe it should occur earlier in the process.
So, how can we help bridge the consumer knowledge gap and smooth the process for lenders?
We can start by letting buyers know that homeownership education is evolving to fit their needs and busy lives. There’s no reason for it to be a burden. With online courses, such as the Framework® home-buyer education course, your borrowers can complete the course on their phone, tablet, or computer. Buyers can fit in a bit during their lunch hour, waiting for an appointment, or whenever they have time. The Framework course, available in English and Spanish, meets or exceeds national industry standards and consistently receives high marks from learners.
Beyond the convenience offered by today’s high-quality courses, homeownership education can help borrowers become:
- Prepared. A high-quality course can help borrowers get ready to qualify for a mortgage. From deciding on a budget to lining up the home inspection to collecting the necessary documents, prepared borrowers will be primed to navigate the mortgage process smoothly, saving lenders time and resources.
- Knowledgeable. Homeownership education covers the essential information buyers need to maintain and sustain the investment in their home. Although a buyer can’t control whether the housing market goes up or down, he or she can do regular maintenance and home improvements that may add value.
- Resilient. Homeownership education can help buyers avoid common pitfalls and prepare them to recover when things go wrong during the mortgage process or down the road. The reality is, no matter how good the preparation, circumstances will go south for some borrowers. For the problems that can’t be avoided, education can help borrowers manage the consequences and recover quickly.
Fannie Mae believes that homeownership education is the best way to prepare borrowers to succeed as homeowners in the long term. That’s why our HomeReady® mortgage, our 3% down payment product designed to help lenders serve low- to moderate-income borrowers, requires that at least one buyer on each purchase transaction complete the Framework course (with some exceptions).
And, for those consumers who need customized assistance to become mortgage-ready, housing counseling from a HUD-approved nonprofit counseling agency may be the best pathway to homeownership. Counseling addresses a buyer’s unique financial circumstances and housing issues, and it includes an education component that may be delivered one-on-one or via classroom or self-guided online programs, such as the Framework course. Not only does counseling fulfill the HomeReady homeownership education requirement, Fannie Mae provides lenders with a $500 loan-level price adjustment credit for each HomeReady purchase transaction on which a buyer received assistance from a HUD-approved nonprofit counseling agency before entering into the contract to purchase the home.
So, as we celebrate National Homeownership Month, let’s spread the word that homeownership education and housing counseling are evolving to meet borrower needs and that they support all of our efforts to make homeownership sustainable. Sustainability is good for business – that’s something we can celebrate every month of the year.
Visit our website to learn more about homeownership education and find resources to grow your business with HomeReady.