Education: the Path to Homeownership

Editor’s note: Guest post provided by real estate and mortgage industry expert Rob Chrane.

Many homebuyers are confused about how much they need for a down payment, and many aren’t aware of what resources are available to assist with buying a home. To discuss this topic, we reached out to Rob Chrane, who founded Down Payment Resource to connect eligible homebuyers and eligible properties with hard-to-find down payment programs.

__

Selling Through Education

During my years as a real estate broker, I recruited and trained many new agents. At some point, I noticed that many who became successful were former teachers. I once asked a top agent in Atlanta to what she attributed her success. She replied that selling is all about educating people on the path to homeownership, and the key to her real estate career was her training and experience as a teacher.

Studies continuously show how little first-time homebuyers know about the path to homeownership.

In study after study, we see how little first-time homebuyers know about the path to homeownership, especially when it comes to down payment requirements and options. The world needs real estate agent and mortgage loan officer “teachers” more than ever. Those who take the time to learn the full range of options for buyers will be rewarded with more commissions, referrals and the satisfaction that comes from helping people become successful homeowners.

A new report on credit access and affordability by the Urban Institute’s Housing Finance Policy Center commissioned by Down Payment Resource and Freddie Mac shows how many homebuyers could have taken advantage of down payment assistance and other affordable lending programs in 2016.

The Barriers to Homeownership: Down Payments, Credit Access, and Affordability Report focused on the 3 most significant barriers to homeownership: saving for a down payment, accessing mortgage credit and housing affordability.

Less than a third of consumers are familiar with low down-payment programs.

Consider these key findings:

• Only 23% of consumers are familiar with low-down-payment programs; 40% say they don’t know how much of a down payment lenders expect; and another 30% erroneously believe that lenders expect 20% or more
• Lack of knowledge about down payment options has kept renters from buying homes, especially where smaller down payments make buying a home less expensive than renting
• Low-down-payment programs, which can support middle-income borrowers in some high-cost markets, are widely available on a local level across the nation

Increasing Program Visibility

In today’s heated markets, where both home prices and rents are rising, renters can access credit and become homeowners with the help of low-down-payment mortgages and down payment assistance programs. Yet borrower data shows that many consumers are not taking advantage of these programs that can provide greater access to credit and the path to homeownership.

“We need to increase these programs’ visibility and ensure borrowers in a mortgage transaction know about assistance they could be getting. Not all down payment assistance programs are created equal, and they come in different forms. These programs often include consumer education or housing counseling that allow potential borrowers to better understand whether homeownership is right for them. Homebuyers need to be better educated and made aware of the benefits and costs of these programs,” the report concluded.

That’s where you come in! There are thousands of down payment assistance programs across the US. In fact, 87% of properties across the country are in an area eligible for 1 or more homeownership programs. First, you need to educate yourself if you want to turn home searchers into homeowners.

Here are some suggestions:

• Contact and visit the non-profit, housing-counseling agencies in your lending area. Many of them offer assistance programs (forgivable or deferred) or grants to help individuals and families buy homes in the local community. Participating in these programs gives you the opportunity to help someone overcome that last hurdle to being able to find a home. The US Department of Housing and Urban Development (HUD) website allows you to search and connect with an approved housing counseling agency through its interactive map
• Check out your state and local housing agencies. Not only do they offer first mortgage products designed with increased flexibilities to address underserved markets, but most also have down payment assistance programs that can be used with their own products or as a stand-alone program

The more knowledgeable you are about the programs available in your specific area, the better position you will be in to be the teacher and educate potential homebuyers so they are able to make that leap to homeownership. Educating consumers about low-down-payment mortgages and down payment assistance is critical to ensuring the path to homeownership is accessible to more families.

What are some of the downpayment resources you use to educate your homebuyers?

—

Explore some additional Loan Officer tools to assist homebuyers right now.

Explore Now

The opinions and insights expressed in Education: the Path to Homeownership are solely those of its author, Rob Chrane, and do not necessarily represent the views of either Mortgage Guaranty Insurance Corporation or any of its parent, affiliates, or subsidiaries (collectively, “MGIC”). Neither MGIC nor any of its officers, directors, employees or agents makes any representations or warranties of any kind regarding the soundness, reliability, accuracy or completeness of any opinion, insight, recommendation, data, or other information contained in Education: the Path to Homeownership, or its suitable for any intended purpose.