Although CFPB regulations have required a focus on homebuyer education, these initiatives are not new to lending. In fact, it’s safe to say credit union lenders have focused on educating members for as long as they have existed. And, you’ll find it no surprise that a recent study by Fannie Mae revealed that both borrowers and real estate professionals found value in pre-purchase homeownership education (HE). The surprise lies in why, even after the crash, so few borrowers want to participate in these helpful sessions that they in fact do admit are valuable.
The study by Fannie Mae “Pre-Purchase Homeownership Education Qualitative Research: Lower-Income First-Time Homebuyers” provided this key input as to why HE doesn’t have a wider participation.
Borrower’s viewpoint on Homeowner Education
- HE involves time and is an inconvenience. It’s “another hoop to jump through” during an already stressful time.
- It’s perceived as boring because it sounds like school and borrowers are much more interested in going to find the house then they are to educate themselves on the buying process.
- If a fee is involved, it’s just one more thing they have to pay for in the purchase. Most lower-income buyers didn’t have the extra money to pay for education along the way. However, if a fee was in some way paid back in closing or reimbursed by a special offer such as $500 off closing costs, the borrower would feel more comfortable to pay for the HE.
- Timing was a frustration to the borrower. Those who did get offered HE options, were during their transaction and most likely as a requirement with the product or program they were financing with. Borrowers felt they needed the HE prior to the transaction and sessions offered during the transaction were too late.
Does any of this data surprise you? It may be time to take your homebuyer education up a notch. If you are offering home buying seminars or credit seminars, evaluate your session. See how you might be able to improve your event and entice a larger attendance. An educated member will value your expertise and return to you for more information and hopefully for a home loan.