In order to help borrowers be more prepared, and even expand the pool of eligible homebuyers, Fannie Mae explained homeowner education and housing counseling must play a critical role.
However, the company explained consumers and even some lenders see homeownership education courses as simply an inconvenience.
“Yet, homeownership education is often viewed by buyers as just another hoop to jump through during an already stressful time,” Michael Hernandez, Fannie Mae vice president of housing access and affordable housing initiatives, wrote in a blog. “And, for some loan officers, it’s seen as a requirement that can delay a loan closing.”
A survey of consumers showed that about 50% of Americans were unable to answer questions about key mortgage qualification criteria.
Fannie Mae suggest that in order to make homeownership education more accessible to buyers, and more convenient for lenders, that the industry can point borrowers toward online courses which they can fit in when they’re ready.
Here are some of the benefits Fannie Mae listed from homeownership education:
- 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 (also helping lenders to save time and resources).
- 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.
- Homeownership education, which often includes post-purchase follow-up and access to counseling, 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.
According to Fannie Mae, homeownership education is the best way to prepare borrowers for success in the long-term.
And Fannie Mae isn’t the only company pushing for more education. United Wholesale Mortgage recently conducted a study on Millennials, and concluded more education is the key to increasing the homeownership rate in the younger generation.
In fact, UWM recently called out lenders for not educating consumers more after a study from the National Association of Realtors showed 87% of non-homeowners think they need at least 10% down in order to purchase a home.
And Fannie Mae released a study in April showing why many homeowners aren’t getting the education they need, and what can be done about it.