Housing counseling eases buying a home

The real estate business has been booming during the last five years and thanks to lower interest rates, many Americans who previously couldn’t qualify for a loan have been able to buy one for the first time. There are still many people in the United States who cannot qualify for a loan, mostly due to poor credit histories.

 In the past, people with these problems were mostly out of luck and forced to continue renting. But a fairly new solution has come about that can help many people who otherwise wouldn’t qualify for a loan to more into the home of their dreams.

That new solution is called ‘housing counseling.” Housing counseling is a non-profit service, usually offered for free, that examines the financial situations of would-be borrowers and helps to educate them about the home buying process as well as the process of maintaining a fiscally sound lifestyle.

These programs are primarily aimed at low to moderate income people who, historically, have had difficulties buying houses. Many of these people are unaware of the importance of their credit report or their credit score and don’t know how to improve any problems that might arise with their credit history. 

Most people know that the FICO credit score is a vital component used by lending institutions to determine whether or not a customer is worthy of obtaining a loan. That score, which ranges from 300 on the low end to 850 on the high end, is a distillation of a consumer’s credit worthiness, reduced to a simple three digit number. The three major credit bureaus maintain these scores for millions of Americans.

And that’s fine, if you are aware of it, but if you know nothing about your score, how it works, and how you can improve it, then you are likely out of luck when it comes time to apply for a loan.

These housing counseling sessions will teach their clients about the importance of retiring old debts and paying new ones off on time. These two things are the keys to not only improving a credit score, but maintaining it once it is established.  It’s possible, armed with some useful information and a bit of diligence, to raise your credit score by several hundred points in a year or so if you are determined to do so. It’s knowing that you need to do it that makes it possible, and that’s where the counselors provide the biggest help.

In some states, such as Delaware, low income borrowers may even qualify for matching contributions to down payments, known as “individual development accounts” that can ease the burden of coming up with an adequate down payment, which is often the single biggest hurdle to buying a home for a first time buyer.

Hundreds, if not thousands, of people have benefited from such guidance in the past, and as these programs become better known, those numbers will increase. This is good for everyone, as neighborhoods with homeowners, rather than renters, tend to be safer neighborhoods. And most anyone would agree that safer neighborhoods are better places to live.