For many buyers, the process of purchasing a home can seem complicated and overwhelming. There are also buyers who feel ready to purchase a home but in reality may not be financially ready. Time spent in a homebuyer education class or with a HUD certified housing counselor can help a buyer understand the process and reach a position of being mortgage-ready. REALTORS® can refer the potential buyer to a HUD certified housing counselor who has the tools and expertise to help the client resolve financial, problems, determine actual household needs, and work on a budget and spending plan and an action plan that begins to prepare the buyer to meet the financial requirements of his or her new home. After working with a housing counselor, the client can return to the REALTOR® and begin looking in earnest for the right home.
What is homeownership education?
Homeownership education is a process resulting in a potential buyer’s ability to demonstrate an understanding of the following: preparing for homeownership, budgeting and credit management, financing a home, the loan process and timing, selecting a home, maintaining a home and finances, and avoiding delinquency and foreclosure. Education is formal classes, with established curriculum and instructional goals, provided in a group or classroom setting, or other format such as web-based.
What is homeownership counseling?
Counseling is one-on-one, counselor-to-client assistance that addresses unique financial circumstances and housing issues, and focuses on overcoming specific obstacles to achieving a housing goal including (but not limited to) repairing credit, saving money for a down payment, qualifying for down payment assistance, raising awareness about topics such as predatory lending practices, or resolving a financial crisis. Counseling will usually involve the creation of an action plan identifying what the counseling agency and the client will do in order to meet the client’s housing goals.
What are the benefits of education and counseling?
Homeownership education and counseling provides potential buyers with tools and information to help them make housing choices that are affordable and sustainable. Studies suggest that buyers who participate in education and counseling programs are less likely to experience mortgage delinquencies and foreclosures. In addition an educated buyer can help make the home buying process go more smoothly for the REALTOR® and the lender.
What is the role of the housing counselor?
A housing counselor is a trained professional who provides advice and guidance to individuals and households in order to assist them in improving their housing situation and meeting the responsibilities of homeownership. HUD certified counselors can earn certifications in a variety of areas in addition to pre-purchase counseling, such as foreclosure prevention and reverse mortgage.
Where do potential buyers find a housing counselor?
The U.S. Department of Housing and Urban Development (HUD) sponsors housing counseling agencies throughout the country. HUD provides a directory of HUD approved housing counseling agencies on its website.
Additionally, please visit the HUD Office of Housing Counseling webpage to browse related guidance, resources, and training.
What are the National Industry Standards for Homeownership Education and Counseling?
The National Industry Standards for Homeownership Education and Counseling (Standards) provide a baseline for what constitutes quality homeownership education and counseling. Organizations and homeownership professionals can use the Standards to ensure that quality homeownership education and housing counseling services are delivered to clients. These standards create a level of consistency in the industry and add to the continued professional delivery of specialized services by counselors and educators nationwide. The Standards were created by the National Industry Standards for Homeownership Education and Counseling Committee. The National Association of REALTORS serves on the committee and played a role in the development of the Standards. Learn more about the Standards.
NAR Political Advocacy
NAR is supporting legislation that would lower an FHA borrower's mortgage insurance premiums once they have completed a housing counseling program. These bills, each called the ‘‘Housing Financial Literacy Act of 2021" are S. 1490, sponsored by Senators Peters (D-MI) and Senator Cornyn (R-TX), and H.R. 1395, sponsored by Rep. Beatty (D-OH). These bills will help homebuyers gain a greater understanding of mortgage and homeownership responsibilities while improving housing affordability. FHA’s current premiums are significantly higher than what is necessary to cover the risks of losses, and NAR strongly supports efforts to reduce FHA premiums. H.R. 1395 passed the House under Suspension of the Rules in April of 2021. NAR continues to advocate for these bills in the Senate.