Credit Ed­u­ca­tion

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There’s a good rea­son why many peo­ple dream of own­ing a home. Home­own­er­ship of­fers ben­e­fits such as sta­ble monthly pay­ments and the op­por­tu­nity to es­tab­lish a sense of com­mu­nity. It can also be a way to build eq­uity over time.

But don’t dive into the process un­pre­pared. Ex­perts say it’s cru­cial to be­come fi­nan­cially lit­er­ate first.

“Ed­u­cated bor­row­ers are bet­ter pre­pared for suc­cess­ful, long-term home­own­er­ship and over­all fi­nan­cial sta­bil­ity,” says Christina Di­azMalone, Vice Pres­i­dent of Hous­ing and Com­mu­nity Out­reach at Fred­die Mac.

In fact, a re­cent study found that fi­nan­cial coun­sel­ing be­fore pur­chas­ing a home can re­duce the likeli- hood of go­ing into de­fault. For first time home­buy­ers, coun­sel­ing re­duces the like­li­hood by an aver­age of 29 per­cent.

Luck­ily, free credit ed­u­ca­tion re­sources and in­for­ma­tion are be­com­ing more widely avail­able.

For ex­am­ple, Fred­die Mac’s Cred­itS­mart pro­gram, a com­pre­hen­sive, mul­ti­lin­gual cur­ricu­lum used by lenders, churches, schools and non­profit or­ga­ni­za­tions, has helped more than three mil­lion con­sumers across the coun­try make more in­formed fi­nan­cial de­ci­sions. To­day it’s avail­able in two ways.

Cred­itS­mart’s new, self-paced web ver­sion fea­tures 12 ed­u­ca­tion mod­ules. You can take the free on­line course at www.Fred­­its­mart.

Or, con­sider at­tend­ing a class led by a hous­ing coun­selor cer­ti­fied by the US Depart­ment of Hous­ing and Ur­ban De­vel­op­ment.

A credit ed­u­ca­tion course can pre­pare you for home­own­er­ship by cov­er­ing the fol­low­ing top­ics: Bud­gets A spend­ing plan is nec­es­sary for any­one with fi­nan­cial goals. Fi­nan­cial ed­u­ca­tion can help you dif­fer­en­ti­ate your spend­ing needs vs. wants, and set up a re­al­is­tic bud­get ac­cord­ingly, as well as pro­vide guid­ance for how to stick with the plan. Credit Gen­er­ally speak­ing, the bet­ter your credit, the lower your in­ter­est rates and fees will be when ob­tain-

ing a loan. If you don’t have credit or you don’t have good credit, it’s es­sen­tial to es­tab­lish good credit be­fore try­ing to get a loan. Sav­ings To buy a home, you’ll need up­front money for a down pay­ment, which is usu­ally be­tween five and 20 per­cent of the home price, and money for clos­ing costs, mov­ing ex­penses, and any im­me­di­ate re­pairs or ren­o­va­tion costs.

Credit ed­u­ca­tion can teach you how to save and how to in­vest your money wisely. Lingo The real es­tate and mort­gage world has its own lan­guage. And if you aren’t well-versed in it, you can get in over your head quickly. Study up on terms and con­cepts like loan-to-value ra­tio and fixed-rate mort­gage so you don’t sign any­thing you don’t un­der­stand! Avoid­ing Fraud Un­for­tu­nately, there are un­scrupu­lous com­pa­nies and in­di­vid­u­als out there who may not have your best in­ter­ests in mind. Re­li­able fi­nan­cial ed­u­ca­tion can help you rec­og­nize the warn­ing signs of fraud. Fa­mil­iar­iz­ing your­self with the re­sources at www.Fred­­own­er­ship/ed­u­ca­tional/ is a good start.

Ask fam­ily and friends for names of real es­tate agents and lenders with whom they’ve worked or con­tact your fi­nan­cial in­sti­tu­tion or a cer­ti­fied hous­ing coun­selor for guid­ance.

Is home­own­er­ship right for you? Don’t just guess. By be­com­ing a savvier con­sumer, you can make smart fi­nan­cial de­ci­sions.


Home­own­er­ship of­fers ben­e­fits such as sta­ble monthly pay­ments and the op­por­tu­nity to es­tab­lish a sense of com­mu­nity.

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