It’s fun to browse home listings online or watch shows like House Hunters. But if you’re not a homeowner, you might be feeling lost as to how to get started acquiring your piece of the American dream.
Beyond the TV shows, which rarely discuss the many nuances of committing to spending multiple hundred thousand dollars for a place to live, there’s a ton of conflicting information floating around about purchasing a home. Family and friends are often happy to share their experiences, but I would hazard a guess that the people who are most willing to provide advice are the people who haven’t actually completed a home purchase recently. A lot can change in the real estate market in just a few years, and while you love Aunt Kathy, you’d probably love another perspective.
Who should attend a home-buying class?
That’s where a homebuyer education course can prove valuable. I know, not everyone is jumping at the chance to sit in a classroom after a long day of going about your duties as an adult. But it’s a chance to get unbiased information about what you can expect from the home-buying process, and your chance to finally figure out once and for all what escrow is.
Plus, these courses are often a prerequisite for participating in first-time homebuyer programs that can make homeownership more financially feasible.
Before you enroll, here’s what you need to know. Just think: You could prepare to buy a home and be able to dominate your couch commentary during your next HGTV marathon.
Where to find a good one
To find a local agency that provides homebuyer education classes, visit the U.S. Department of Housing and Urban Development’s directory of approved housing counseling agencies. You can get results for your state and narrow down the list by inputting your city or ZIP code on the results page. Beyond homebuyer education classes, you’ll be able to see which agencies offer other housing resources like pre-purchase counseling.
Another place to look for local workshops is the National Industry Standards for Homeownership Education and Counseling. The agencies listed in its directory comply with HUD requirements and have also adopted a set of baseline standards for this type of counseling and education.
Attending a class that’s certified by HUD is essential because it’s often required for buyer assistance programs like down payment assistance or preferred mortgage rates. You’ll need to provide documentation that you successfully completed a class, like a certificate. Some programs require you to have attended such a class within the past one or two years.
You can also find classes online. One Lifehacker reader recommended Framework, an online course that meets HUD guidelines. An online course may work better for you if your schedule is packed or you prefer to work at your own pace.
Whether you attend in person or online, you can expect a course to take anywhere between four and eight hours. If you’re taking a course online, you may be required to complete the curriculum within a certain timeframe, like 30 days.
What it costs
The cost of a course can vary depending on who’s hosting it. In general, expect to pay at least $75. But feel free to shop around among the options in your area and online. For instance, one online course offered through the Northeast Michigan Community Service Agency allows you to sign up online for $99, but offers a discount to people who contact them before doing so.
If you plan on buying a home with a partner, you may both need to attend a homebuyer education course. Check with your local housing organizations about their requirements for couples attending courses and if each person must pay the full course cost.
Don’t feel pressured to attend the first course you come across in your search. You can comparison shop to find a class that’s a fit for you in terms of timing, cost, and curriculum.
What you learn
Here’s a summary of the topics you can expect to learn about, as outlined by the National Industry Standards for Homeownership and Counseling:
Homeownership basics, like pros and cons of homeownership and the steps of the home buying process.
Budgeting and financial matters required for homeownership, like figuring out your budget for a home and making sure your credit is solid before applying for a mortgage.
Financing a home, from mortgage lending qualifications to types of mortgages to common lending documents and the closing process. (Psst: This is the part about escrow!)
Shopping for a home, knowing who you’ll need to work with, and how to negotiate the price.
Maintaining your home, including the costs of owning a home beyond the purchase price. You’ll also learn about predatory lending risks and how to avoid foreclosure if you face financial difficulty.
This stuff may be boring as heck on paper, but it’ll take away some of the instant anxiety you might feel when you hear terms like “mortgage points” and “PMI.”
It also gives you an advantage when you have conversations with professionals like real estate agents or lenders. The more knowledge you gain before starting to look for a home, the more confident you’ll be to walk away from someone who’s too pushy or otherwise gives you the willies.
What happens next
It’s up to you to decide what to do when you complete a homebuyer education course. You may jump right into competing the requirements to apply for first-time homebuyer programs in your area, or you might decide to hold off on your home-buying plans. You could come away from a class realizing you don’t want to own a home at all. Either way, you’ll be armed with the information to help you decide. And you will definitely know what “escrow” is.