What is a Housing Counselor and How Can They Help?
I’m getting ready to buy a home and my mom keeps telling me that I need to talk to a housing counselor. I’m already going to get a real estate agent, so I’m not sure why I’d need to talk to someone else on top of that. What is a housing counselor and what are they going to tell me that’s different from what an agent would?
Bowling Green, KY
How a housing counselor can help you
[On-screen text] Consolidated Credit: Ask the Expert
Maria A. Gaitan, Director of Housing Counseling and Community Outreach: Hello, everyone. In the next sixty seconds, I’ll explain why consulting with a housing counselor is critical to your success as a homebuyer and what kind of help they can provide.
A HUD Certified Housing Counselor is uniquely qualified to educate individuals in what they need to know and how they should prepare in order to qualify for a mortgage. From preparing a budget to finding out what monthly mortgage payment you can afford to learning what amount a lender will approve and then finally knowing the price range of the house you can comfortably afford.
A housing counselor will help you create an action plan to meet your goals. Also, a housing counselor will educate you on how to work with a Realtor®, what a bank wants to see in the application, the importance of title insurance, home inspection, home insurance, and the actual closing process.
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What is a housing counselor?
A housing counselor is a financial advocate specifically trained to provide advice and counseling to homebuyers and homeowners. Counselors go through training and receive certification the U.S. Department of Housing and Urban Development (HUD). They are also versed on local programs available through offices like the Federal Housing Administration (FHA).
Working with a housing counselor can be highly beneficial if you’re a first-time homebuyer for a few reasons:
- They can help you make a step-by-step action plan to achieve homeownership, including how to overcome common barriers to homeownership, such as low income, bad credit or no credit and excess credit card debt.
- A counselor can help you identify FHA programs that help first-time homebuyers in your area, such as down payment and closing cost assistance programs.
- They will help you understand exactly how much home you can afford to buy, so you can narrow your search and ensure you buy a home without facing a high risk of foreclosure.
Housing counselors vs real estate agents
Although real estate agents can help you find homes based on what you’re looking for, they usually won’t help you create an action plan based on your situation. They just want to make the sale, so they can collect a commission. And it’s in their best interest to prod you into buying a bigger and better home to increase that commission as much as possible. They don’t have your best interest at heart when it comes to your budget. Real estate agents also aren’t typically familiar with FHA assistance programs. Even a mortgage broker may not be aware of the assistance programs in your area.
This is why talking to a counselor first when you want to buy a home is so beneficial. You start the process by figuring out if you’re really ready to buy and how much home you can afford. You can also determine if there are steps you need to take to become mortgage-ready. That way, you get on a real path to homeownership before you ever start looking at properties.
What else does a counselor do?
A housing counselor isn’t just there to help first-time homebuyers. Once you own a home, a housing counselor can still provide assistance and support.
- They can answer any questions you have about home equity. For instance, they can help you understand how and when to access the equity in your home without risking foreclosure.
- Housing counselors also provide reverse mortgage counseling to seniors. This is a low-risk lending option for homeowners age 62 and over. However, you must get counseling before you can use it to make sure it’s the right option for your situation.
- If you’re facing foreclosure, they can help you understand your options for relief. 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.