Homebuyer Education & It's Importance
All too often I get a call from a borrower wanting to get pre-approve to go out and look at homes an hour later and go under contract in the next few days. It is said that consumers spend more time researching a purchase of a car or a vacation. I don’t have the statistics to back it up but from my experience it would seem to be correct.
My opinion is that you should get pre-approved at least 2 months in advance before buying a home. I have concluded that 2 months is the minimum because this will help to prepare the buyer but also we can make sure that their assets are in order as this seems to be the #1 issue on loans, undocumented deposits. This is the reason you will hear people say that getting a mortgage is so hard especially for self-employed borrowers as they have even more deposits. My only 2 cents is that you should always keep records of deposits especially as a self-employed borrower. I am amazed at how many times I see a deposit of $500 plus and the borrower doesn’t know what it is. I just can’t understand that but I guess my generation, the Millennials, do not reconcile their bank accounts.
Here is a great article from Mortgage News Daily, “Study Indicates Pre-Purchase Home Owner Counseling Works.” Is this 8 hour course an inconvenience to take? Of course it is but the statistics speak for themselves and many could consider us to be a financially illiterate country.
“The study found that NeighborWorks pre-purchase counseling and education works. Clients receiving pre-purchase counseling and education from NeighborWorks organizations are one-third less likely to become 90+ days delinquent over the two years after receiving their loan than are borrowers who do not receiving pre-purchase counseling from NeighborWorks organizations. The finding is consistent across years of loan origin, even as the mortgage market changed in a period of financial crisis. It applies equally to first-time homebuyers and to repeat buyers.”