Financial counselors and consumer advocates are promoting financial education during National Homeownership Month, but it’s somewhat uncertain if borrowers actually become more “ready” to buy a home as a result.
Housing counselors and educators are expected to give potential homeowners skills and the tools to be successful in homeownership – preparation to stay current on their mortgage and managing home ownership expenses, according to Money Management International, a nonprofit credit-counseling agency.
But this will not necessarily improve their financial condition to qualify for a mortgage, according to Scott Schang, who manages marketing at Broadview Mortgage in Irvine, California. Budgeting is solely the responsibility of the borrower, Schang said.
When borrowers want to know if they can afford a mortgage, Schang says he often refers them to the Housing and Urban Development website, which offers affordability calculators and special borrower programs.
What a financial counselor can do, however, is make borrowers more “emotionally” ready for buying a home, said Schang, which can be useful.
For more serious financial damage control, borrowers who have had a prior bankruptcy, for example, borrowers might need to go to what is called a “loan groomer”.
The National Home Buyer’s Alliance (NHBA), which puts borrowers through an intense credit history clean-up, can help them become more “mortgage ready,” said Scott Hutchinson at the NHBA. For a cost paid by the borrower, the agency will work for as long as 15 months to clean up the borrowers’ credit, helping them settle past debts, gathering documentation that will eventually be delivered to a mortgage professional.