Lisa Schade

Broker, BS, CDPE, SFR

Four Reasons Veterans Should Work With a Housing Counselor When Pursuing Homeownership

 


In an effort to improve the homeownership and financial planning outcomes of active duty service members and veterans, NeighborWorks America CEO Eileen Fitzgerald called upon nonprofit housing counselors and nonprofit financial capability coaches to increase their outreach and other marketing efforts to those who have chosen to serve their country in the armed forces.

A recent survey by NeighborWorks America found that homeownership is a major goal for veterans and their families. According to the survey, 92 percent of veterans said that homeownership was an important part of their American Dream. And by a nearly three-to-two margin (49 percent to 32 percent), veterans today feel prepared to buy a home.

Against this backdrop, Fitzgerald identified four reasons that service members and their qualified family members considering homeownership or financial planning should work with a housing counselor. These reasons included how taking advantage of nonprofit housing counseling and education could help reduce the significantly higher mortgage delinquency rate seen among borrowers with mortgages backed by a Department of Veterans Affairs guaranty.

Become familiar with the home buying process.


With home prices rising in nearly every market across the United States, and mortgage rates moving erratically, active duty service members, veterans and eligible spouses have the unique opportunity to purchase a home with a zero down payment because of the 100 percent borrowing ability enabled by a home loan backed by a Veterans Affairs guaranty.

"A zero percent down payment mortgage could be a great way for those who qualify to achieve homeownership," said Fitzgerald. "But there's more to buying a home than having enough money for the down payment. It's extremely important to understand the home buying process and to know how to avoid potential risks. That's where NeighborWorks network and other nonprofit housing counseling agencies add tremendous value, by providing step-by-step information on everything from how to pick a real estate agent to guidance on home energy efficiency."

Take steps to reduce default risks.


One of the major downside risks of homeownership is delinquency that could lead to foreclosure. Default and foreclosure damage a homeowner's credit, cause extra stress and could lead to poor financial decisions - such as falling prey to a mortgage loan modification scam - that have the potential produce even worse financial outcomes. 

"Working with data from the credit reporting company Experian, NeighborWorks America showed that homebuyer education and counseling is effective at helping to reduce serious mortgage delinquency," said Fitzgerald. "There are many factors that can lead to delinquency and default, but one thing that seems to help reduce the risk of default is housing counseling and education." 

Locate closing cost assistance.

VA mortgage eligible homebuyers have the opportunity to include their closing costs in the overall mortgage amount borrowed. Although closing costs vary from location to location, they typically are several thousand dollars. But what if a VA borrower who may have little cash saved didn't want to borrow the closing costs as well as the money needed to purchase the house. What's the solution?

"There are a number of ways that working with a nonprofit housing counselor could help a VA mortgage borrower obtain closing costs," explained Fitzgerald. "While each assistance program has different terms and conditions, the best way to determine eligibility is to work with a nonprofit housing counselor."

Connect with a financial coach.

According to Fitzgerald, a growing number of nonprofit housing counseling organizations are increasing the skill set of their staffs by having some counselors become certified as financial capability coaches.

"Financial capability coaches help everyone establish a plan to meet their financial goals, whether that's to achieve homeownership or another goal such as decreasing credit card balances or increasing savings," said Fitzgerald.

Research from a recent project between the Citi Foundation and NeighborWorks America found that that people who received financial coaching significantly improved their savings habits, enhanced their credit scores and meaningfully paid down debts.

"Nonprofit housing counselors who also are certified financial coaches are a key asset for service members to connect to," said Fitzgerald. "The bottom line is that whether a homebuyer is using a VA mortgage or not, the nonprofit housing counseling community is here for active duty service members and veterans to help them achieve their financial goals." 

Reprinted with permission from RISMedia. ©2014. All rights reserved.

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