What is a Housing Counselor and How Can They Help?

A housing counselor is a financial advocate who can advise on a wide range of housing-related topics such as buying a home, default and foreclosure prevention, and reverse mortgages, and is also knowledgeable about local and state-level assistance programs and procedures.

To obtain the title of a housing counselor they must receive certification from the U.S. Department of Housing and Urban Development (HUD). Therefore, all housing counselors are HUD-certified housing counselors. 

A housing counselor is different from a realtor or real estate counselor. Key differences are that housing counselors are not commission-based and offer guidance about accessing and retaining housing rather than providing insights about a property. However, a realtor can take the exam to become certified as a housing counselor in addition to being a licensed real estate agent.

What does a housing counselor do?

Housing counselors can assist renters, homebuyers, and current homeowners on all things housing-related, but are perhaps best known for homeownership counseling services, specifically when assisting first-time homebuyers. They can also offer financial guidance on things like debt management, building and improving credit, or budgeting. 

• Create a step-by-step action plan to achieve homeownership to overcome common financial barriers such as low income, bad credit, or too much credit card debt.
• Identify local Federal Housing Administration (FHA) programs such as down payment and closing cost assistance – some of the greatest barriers for first-time buyers
• Explain how much home you can afford for a more accurate home search thereby reducing your risk of default or foreclosure
• Answer questions about home equity. For instance, they can help you understand how and when to access the equity in your home without risking foreclosure.
• Provide reverse mortgage counseling to seniors, a low-risk lending option for homeowners aged 62 and over that requires counseling before moving forward.
• If you’re facing foreclosure, they can help you understand your options. Whether you want to save your home or simply get out of your mortgage with the least financial and credit damage possible, a housing counselor can help you understand the range of options you have. Then they can review your budget to help you find the best option for your unique financial situation.

Housing counselors vs. Real estate agents

Real estate agents help buyers find properties, identify value potential, and negotiate with sellers. Their priority is making a sale and collecting a commission which can mean they don’t always have a buyer’s best interest at heart and may encourage you to buy a bigger, more expensive, home whether or not you can actually afford it. 

Unlike a housing counselor, realtors do not create action plans to improve a buyer’s ability to afford a home or their likelihood of being approved for a mortgage. Further, real estate agents aren’t always familiar with FHA assistance programs which may result in homebuyers paying more for their homes than necessary. 

For these reasons, it’s strongly recommended to talk to a housing counselor first, rather than a realtor when starting the home-buying process. A housing counselor will help you determine if you’re actually ready to buy, how much you can afford, and what steps are needed to become mortgage-ready.