Buying a first home is an exciting life moment. But there’s a lot to consider when searching for that perfect house—and wading through your borrowing options can be daunting. With so many decisions to be made, talking to a housing counselor can help you understand how to better approach taking out a mortgage and any assistance programs that might be available to you.
Currently, we’re in what’s known as a "seller’s market," meaning houses are selling well above the asking price. You could even find yourself in a bidding war over a home, so a part of your process should be deciding whether you need a home right now, or if you want to wait until the market evens out. Regardless, you’ll want to consider location, school district, tax rate, crime rate, and the rate of growth in the area you’re looking.
For first-time homeowners, there are federal- and state-based mortgage programs that can help you purchase your home, whether you have a large down payment stowed away or qualify as low income. In New York, the State of New York Mortgage Agency’s (SONYMA) First-Time Home Buyers Program offers a variety of initiatives to help. And you don’t have to be a first-time buyer to qualify. As long as you haven’t owned a primary residence for three years, you’re considered a new home buyer.
With various programs available to you, navigating them with a housing counselor is highly recommended, especially for first-time home buyers. What do counselors specifically do? They can help you find a home, a mortgage program, and solve any issues with debt and credit.
Here are five benefits of getting professional housing counseling:
1. Lowers your risk of defaulting on your mortgage: By getting housing counseling before attempting to purchase your first home, you’ll be more informed about decisions that go into purchasing real estate, as well as the responsibilities that go into owning a home. According to Habitat for Humanity, homeowners who participate in pre-education are less likely to become delinquent on their mortgage within the first two years of their loan.
2. Build a sustainable household budget: While the education services provided by housing counseling are invaluable, counselors can also help you develop a budget for homeownership, as well as work with you to knock down your debt, start to save, and boost your credit score.
3. Get a mortgage. After all, that’s the main goal. A housing counselor can help you make the leap and buy your home. Through housing counseling, you can become eligible for fixed-rate loans, below-market mortgage rates, closing cost grants, down payment assistance programs, and more.
4. Sustain homeownership and less debt: Studies have shown that people who received housing counseling have fewer instances of foreclosure, while it also positively impacts long-term credit scores. According to HUD, people who participate in housing counseling average $11,300 less in household debt.
5. Healthier community: When you participate in housing counseling before purchasing your home, you’re investing in your community. The more people who also receive housing counseling and reap the financial and educational benefits, the healthier the housing community will become.
Housing counseling isn’t just for first-time buyers. If you’re 62 years and older and looking to take out a reverse mortgage, housing counselors can help you understand your options and whether it’s the right step for you. Likewise, anyone who is dealing with missed mortgage payments and the fear of foreclosure should also get housing counseling. Counselors can work with you and your mortgage servicers to prevent foreclosure and keep you in your home.
Ultimately, housing counseling can help save you money and improve your overall financial health.