First-Time Homebuyer Class: Why You Might Need It
If you’re buying a house for the first time, navigating that process can feel overwhelming. You have to crunch the numbers to figure out what you can afford, find a home that fits your lifestyle and budget, choose a lender and negotiate the best terms—the list goes on.
Fortunately, there are education courses to help first-time homebuyers wade through all this information, and become better prepared to make a purchase. Even if you consider yourself a savvy homebuyer already, these classes can be well worth your time since they’re often required to qualify for down-payment assistance, lower mortgage rates and other benefits.
What Is a Homebuyer Education Course?
If you’re thinking about buying a house for the first time, or reentering the housing market after some past financial difficulties, there are classes available to help guide you through the process.
While various organizations across the country offer homebuyer education courses, the course content is primarily set by the U.S. Department of Housing and Urban Development (HUD). Organizations are also encouraged to adopt the National Industry Standards for Homeownership Education and Counseling.
These classes are designed to walk you through the entire homebuying process so you know exactly what to expect and how to manage the costs. Some topics you can expect to learn about include:
- Pros and cons of owning a home
- Knowing when you’re ready to buy
- Planning for maintenance and other costs
- How to apply for a mortgage and choose a lender
- Basic personal finance topics like budgeting and credit
Classes are offered in a variety of formats, including in-person classes, one-on-one phone sessions and online courses.
How Homebuyer Education Works
The exact process for attending a homebuyer class will depend on the organization that offers it and where you live. In general, there are a few things you can expect. Below are answers to some of the most common questions around how homebuyer education works.
Am I Required to Take a First-time Homebuyer Class?
Yes and no. Not all first-time homebuyers have to take a class. However, there are many special programs and grants for first-time homebuyers that do require you to attend a class in order to be eligible.
For instance, Fannie Mae requires first-time buyers to attend a homebuyer education course for its HomeReady program, as well as other programs. By completing a course, borrowers can qualify for perks such as competitive pricing, as little as 3% down and using gift funds for 100% of the down payment and closing costs. Freddie Mac’s HomePossible and HomeOne loan programs offer similar aid to first-time borrowers who complete a class.
Other state-sponsored, first-time homebuyer programs that offer down payment assistance, grants, lower mortgage rates and flexible credit requirements also usually require buyers to take a class before qualifying.
How Long Does a First-time Homebuyer Seminar Take?
If you do decide to take a first-time homebuyer class, you fortunately don’t have to invest a ton of time. Many classes are no more than eight hours long and typically take place over the course of one day. You can typically complete online classes at your own pace.
However, if you need additional guidance, it’s possible to receive several hours of training through homeowner counseling programs. With these programs, participants receive one-on-one guidance and usually work on a custom, detailed action plan for homeownership.
Ongoing counseling is recommended—and sometimes required—for prospective homeowners who face certain challenges, such as a lack of savings or lower income.
How are Homeowner Classes Graded?
In order to qualify for certain first-time homeowner programs, simply signing up for a course is not enough. You have to show that you paid attention and retained the information with a proof that you completed the class.
As far as grading goes, many classes are a pass/fail system. Some programs do require participants to take quizzes that are graded on more of a traditional system. For example, a score of 70% and higher may be considered passing. Once you pass the class, you will be given a certification of completion that you can show lenders.
When Should I Take a First-time Homebuyer Class?
If you’re required to attend a first-time homebuyer course, it’s usually not needed until you get to the financing portion of the process. Lenders will often require that you complete your training prior to closing in order to qualify for certain types of loans or aid.
However, these classes cover a whole lot more than just the mortgage process. To get the most of your homebuyer education, attend a class as early in the process as possible. That way, you have plenty of information about critical steps like choosing a home, budgeting for the costs and evaluating mortgage lenders before you’ve already made a commitment.
Also keep in mind that in-person classes can fill up quickly, so it’s best not to wait until the last minute to sign up for one.
First-time Homebuyer Class Costs
The cost to attend a homebuyer class varies, but it’s usually quite affordable. Some classes are actually free and paid by the lender, real estate agent or HUD. Others may charge up to around $100.
When evaluating classes and prices, be sure that you choose a HUD-certified course. Some of the other free options don’t meet the standards required by certain assistance programs. Always double-check that you’re enrolling in a HUD-approved course.
How to Find a Homebuyer Education Course
A number of lenders, real estate brokerages, nonprofit organizations and other housing groups offer first-time homebuyer classes. To find a qualifying program near you, start with this directory of HUD-approved housing counseling agencies. You can also check with your state housing finance authority using this directory.