This article was written for our sponsor, Consumer Education Services Inc.
Over the past few years, as the stress and financial turmoil caused by the 2008 housing crisis has faded, the national homeownership rate has been climbing — teetering at around 64 percent. While the current rate still has room to grow before it reaches 2005’s all-time high of 70 percent, the consistent increase over the past few years is an encouraging indicator that more Americans are ready to enter or re-enter the housing market.
Unfortunately, many potential homebuyers feel their outstanding debt is preventing them from getting serious about homeownership. In fact, on a national scale, a greater amount of people have been waiting longer to purchase a home, largely due to the pressure of paying off student loans.
According to the National Association of Realtors, 83 percent of non-homeowners with student loan debt list it as the top reason why they’ve put off their home-buying plans.
Whether you’re burdened with student loans, struggling to start a nest egg, or are overwhelmed with other expenses, there are plenty of programs that provide low-to-moderate income buyers with the financial foundation needed to purchase a home.
One place to begin this journey? The non-profit credit counseling company Consumer Education Services Inc.
“We start by asking the question, ‘Are you ready to buy a home?'” said Greg Smalls, director of housing development at CESI. “Then we’re ready to get into the details like, ‘Do you have the money for closing costs or the credit score to qualify for a loan or down payment assistance programs?’ For example, for down payment assistance programs, the minimum credit score needed is 640.”
These primary questions are some of the first steps covered in CESI’s homebuyer workshops.
In addition to covering down payment funds and credit score, the course also reviews home buying related concerns like managing your money, the process of obtaining a loan, shopping for a home, the details of the Fair Housing Act, and how to determine eligibility for things like VA or USDA loans. The end goal is to ensure buyers are aware of and educated about every resource available to them.
“Our homebuyer workshop is the first place to start if you’re interested in buying,” mentioned Mike Croxson, CEO of CESI. “It introduces the fundamentals that everyone should know before entering the home-buying process. Not only that, but it’s also a prerequisite for state and local initiatives that can help with down payments and closing costs.”
One such program, the Community Partners Loan Pool, requires completion of a homebuyer education course. To qualify for the CPLP, potential homebuyers must meet income limits mandated by the Department of Housing and Urban Development. The exact amount is determined by the size of a household and the location of the home.
If a buyer does qualify for the CPLP, they can receive a $30,000, interest-free loan that doesn’t have to be repaid until the end of the loan term or the home is sold. Essentially, this financial program increases an individual’s buying power. If, for example, one could only afford a home for $140,000, the CPLP allows them to search up to the $170,000 range instead.
Last year, CESI helped 49 families qualify for the CPLP program, securing $1,435,416 in down payment assistance funding for these people to achieve their dream of homeownership.
“We had an individual that closed on a home about two or three months ago,” Smalls recalled. “She sent us an email thanking us. It cost her a total of $20 in closing costs. She received $30,000 from the CPLP, and she put in $1,000 into a matched savings program, so she wound up paying just $20 when she closed.”
Programs like the CPLP give buyers a considerable advantage during the home buying process. For example, aspects of home buying like loan eligibility, closing costs and details of the Fair Housing Act are often foreign concepts to buyers. By equipping them with the knowledge of intricacies such as these, CESI prepares its clients to face not only their current buying experience but also any others in the future.
“The real importance of homeownership is understanding that it’s not an event, it’s a process that lasts for years. Understanding what you’re getting into is an important part of that process. No one is born knowing how the mortgage process works,” Croxon said. “There is no judgment associated with finding out exactly how the process works to set yourself up for success.”
CESI offers its homebuyer workshops multiple times each month. Not only are these courses and programs valuable resources for financial literacy, but they also pave the way for interested homebuyers to take their first steps towards purchasing a home, which can contribute to overall financial stability.
The CPLP is offered by the NC Housing Finance Agency, a self-supporting public agency, through participating local governments and nonprofit organizations statewide. More information can be found at HousingBuildsNC.com.
This article was written for our sponsor, Consumer Education Services Inc.
