How borrower education can make housing more attainable

Dated: July 13 2021

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As reported by HousingWire, today’s U.S. housing market is leaving many prospective homebuyers priced out. Homes, on average, have become less affordable, and the ones that are affordable are in short supply. As a result, 55% of future homebuyers believe that homeownership is out of reach for them financially, according to recent Fannie Mae research.

However, while affordability and supply constraints have weighed on many prospective homebuyers, homeownership education has the power to help people prepare for the homebuying process and successful homeownership. As an industry, we have an opportunity to dispel mortgage qualification misconceptions that prospective homebuyers have and, at the same time, educate housing professionals about ways to better meet their needs.

Future homebuyers were asked to demonstrate their knowledge of the mortgage process and the affordable options available. Among respondents, 73% were unaware of lower down payment options that range from 3% to 5% of a home’s purchase price.

This is an important realization, considering that 31% cited not being able to come up with a down payment as one of the key challenges holding them back from homeownership. These findings align with a 2018 Fannie Mae survey in which many of the 3,000 respondents overestimated the minimum credit score and down payment necessary to qualify for a mortgage, and remained unfamiliar with low down payment programs.

This lack of mortgage knowledge and understanding might seem bleak, but it is actually a great opportunity for our industry to provide educational resources. Fannie Mae research found that 64% of future homebuyers said that they expect mortgage lenders to educate them on the process, and 63% said they want mortgage lenders to show them the right mortgage options for their needs. This demonstrates that many of the barriers preventing more homeownerships can be overcome with more outreach and deeper engagement.

The obstacles to homeownership are very real for many people. However, education is a powerful tool in helping prospective homebuyers better understand their buying power, know what options are available to them, and prepare for sustainable homeownership. Fannie Mae, along with lenders, real estate professionals, housing counselors, and others can all play a role in helping prospective homebuyers become successful homeowners.

Stats at a glance: 

§   

    • 55% of future homebuyers believe that homeownership is out of reach for them financially.
    • 73% of study respondents were unaware of lower down payment options that range from 3% to 5% of a home’s purchase price.
    • 31% of respondents cited not being able to come up with a down payment as one of the key challenges holding them back from homeownership.
    • 3,000 respondents in a Fannie Mae survey in 2018 overestimated the minimum credit score and down payment necessary to qualify for a mortgage
    • 64% of future homebuyers said that they expect mortgage lenders to educate them on the process. 
    • 63% said they want mortgage lenders to show them the right mortgage options for their needs. 

Courtesy of movement mortgage

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Denise Saucedo

My name is Denise Saucedo a mother of 2 sons, grandmother to 5 grandchildren, and the second to the oldest of my 4 sisters. I was born and raised in Corpus Christi, TX and relocated to San Antonio, TX....

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