Homebuyer education courses: What to expect as a first-time buyer
Many homebuyer assistance programs and some mortgage lenders require borrowers to take a homebuyer education course.
If you’re a first-time buyer, it’s a good idea to find out what educational opportunities are available to you — even if you aren’t obligated to complete a class — and take the time to learn about the home-buying process and homeownership before you complete your home purchase.
What is a homebuyer education course?
A homebuyer education course is an online or in-person class you can take to better understand what’s involved in finding, buying and owning a home. You might be required to complete this course by your mortgage lender, or if you’re participating in a down payment assistance or other housing financing program.
“This class explains the home-buying process, what is needed from the borrower to be approved for a mortgage loan, the benefits of homeownership, the challenges of homeownership, and mortgage and lending terms,” explains Wil Hendrix-Griffin, affordable lending manager for PNC Bank in Downers Grove, Illinois.
Sometimes, the course is offered as a pass/fail class, Hendrix-Griffin says, and the buyer usually receives a certificate upon completion of the course. Other courses have a type of grading system, such as the homebuyer education class offered by Take Charge America, a Phoenix-based nonprofit credit counseling agency.
“In our course, attendees carefully review the content and their knowledge is periodically tested through a set of quizzes,” says Jeremy Wine, a housing counseling manager with the organization, which offers the class to buyers in all 50 states. “Those who receive a cumulative score of 70 percent or above will pass our course and receive a certificate of completion.”
What a homebuyer education course teaches you
Homebuyer education courses “take you through your entire journey, from wondering if you are ready and looking at listings to searching for a lender, being ready to make an offer, finalizing a purchase and living in your new home,” explains Danielle Samalin, CEO of Framework Homeownership, a national provider of online homebuyer education courses.
“The best courses also have supplemental content for people who want to learn even more,” Samalin says.
Wine says you can expect to learn about concepts like:
- Debt ratios
- Upfront costs
- Home features to consider
- The professionals involved
- Fair housing rules
- Foreclosure prevention
Each course is different, however, and depends on the organization offering it and the breadth of material it covers. There’s also a difference between attending a class in-person versus taking one online.
“The best courses are in-person classes that allow for substantial interaction within the class and with the instructor,” says Tony Julianelle, CEO of Atlas Real Estate in Denver. “Ideally, the class should provide time for you to develop a household budget and work through various scenarios, such as how you might pay for a large repair if it were needed.”
Cost of a homebuyer education course
Many homebuyer education courses charge a small fee that you have to pay for out of pocket. Some classes are offered free of charge, either funded by your lender, real estate agent, the U.S. Department of Housing and Urban Development (HUD) or the organization offering the course.
“I’ve seen these fees range from $25 to $125 or more,” says Samalin, who notes that her organization’s course costs $75.
Julianelle cautions that a free class you find on your own may not be a HUD-certified course that meets the conditions of the lender or agency requiring you to take it. So, before enrolling in and completing a homebuyer education course, be sure to confirm that it is, in fact, a HUD-approved class.
How long does a homebuyer education course take?
Many homebuyer education courses are four to eight hours long and can be completed in one or two days, either online through a website or app or at a brick-and-mortar location like your real estate agent’s or lender’s office, Hendrix-Griffin says.
“Most courses offered online allow you to complete them at your own pace,” notes Julianelle.
When to take a homebuyer course
It’s best to complete a homebuyer education course as soon as possible, well before closing on your mortgage. Wine says most buyers complete their class before beginning their home search.
“It’s a best practice to complete this education as soon as you’re aware you’ll need it so that you’re able to find a class that works in a short timeframe,” Julianelle says. “Classes fill up quickly at most HUD-certified courses.”
How to find homebuyer education courses
Most homebuyer education courses and first-time homebuyer classes are offered by lenders, nonprofit housing counselors, community development corporations, organizations providing down payment assistance and real estate brokerages, Hendrix-Griffin says.
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