Preparing First-time Buyers for the Responsibilities of Homeownership

What should the federal government’s role be in helping prepare consumers to make financial decisions? How can the housing industry help lead the way for better consumer knowledge and protection?

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An important lesson we have learned from the housing crisis of the past several years is that effective and affordable measures can be taken to increase the likelihood of lower-income families becoming successful homeowners. These measures include:

• appropriately priced loan products
• responsive, professional loan servicing
• high-quality preparatory education and counseling provided to first-time homebuyers

Pre-purchase counseling has been an essential component of Habitat for Humanity’s program for many years. Our curriculum includes the basics of mortgage loan transactions, family budgeting, home maintenance and good neighbor practices. This preparation is a cost effective way to strengthen the abilities of all families to sustain themselves as successful homeowners over the long haul. The low foreclosure rate of Habitat homebuyers, even during the economic challenges of the Great Recession, demonstrates the tremendous value of homeowner education.

A growing chorus of housing experts supports this position. The recently issued report from the Bipartisan Policy Center entitled Housing America’s Future states: “Housing counseling and education must be a central component of any strategy to expand homeownership opportunities, particularly as a means of preparing first-time homebuyers for the financial and other responsibilities of homeownership.”

The need for increased investment in homebuyer education also is highlighted in an April 2013 survey of more than 1,000 current and prospective homeowners conducted by the real estate website Zillow. The report found that nearly one-third of the time, homebuyers answered incorrectly questions about terms, how to choose a lender and financing. The value of pre-purchase counseling is especially helpful for first-time homebuyers, those with limited English skills and lower-income households with limited financial assets.

In light of the strong track record of the benefits that homeownership counseling delivers, we encourage the administration to ask Congress to appropriate significant additional funding for these important services.

Jonathan Reckford is the CEO of Habitat for Humanity.

Welcome to the BPC Housing Commission expert forum! This forum is intended to foster interactive and substantive discussion about pressing housing issues. Each month contributors from different parts of the housing sector will be invited to respond to a discussion topic. Guest posts will feature prominently on BPC’s website, as well as be shared regularly with Housing Commissioners to help inform their work.

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Expert bloggers are not members of the BPC Housing Commission. Any views expressed on this forum do not necessarily represent the views of the Housing Commission, its Co-Chairs, or the Bipartisan Policy Center.