National Study on Finances and Home Buying

There are certain releases of information that people find particularly exciting.  We anticipate their release and wait with bated breath hoping, by some chance, that they might actually release the information earlier than expected.  Things like:

  • Earnings or GDP reports.
  • Netflix new releases.
  • Test results for health issues.
  • Test results for college classes.
  • Amazon delivery dates.
  • And lately, the daily COVID-19 case numbers.

For those of us in the credit counseling world, there is an annual release that we are just as excited about.  Well, at least I am.  See, every year, the National Foundation on Credit Counseling (NFCC) commissions a poll on consumer financial literacy.  Beyond just knowledge, it also tells us where Americans are in savings, spending, and other aspects of their personal finances.

NFCC LogoAfter surveying nearly 1,000 Americans, I found this year’s report found a certain amount of stability.  About the same number of people were saving as were the previous year.  There wasn’t a big change in spending.  And so on.  Don’t get me wrong; I’m definitely in favor of stability over things taking a turn for the worse.

One particular bit of information I keyed in on this year was regarding homeownership.  I’m a huge proponent of the opportunity to own a home.  I love being a homeowner.  I would have it no other way for me.

As I scanned through the key findings of this year’s NFCC study, I was excited to see that 82% of adults have tried to purchase their own homes.  Aside from the personal rewards, we see a lot of positive community impact from homeownership.  This is a good thing.

But as I kept reading, I was disheartened that more than half of those who had tried to purchase their own home had faced barriers to their purchase.  These barriers included little to no credit history and a lack of understanding of the home buying process.

The presence of these barriers is certainly disconcerting.  But what I find even more frustrating is that, in most cases, both of these issues are rather easily addressed.

Lack of Credit History

I often run into people who find it ironic that you have to have debt to have a credit history worthy of obtaining more debt.  Well, that’s actually not quite right.  Good credit history is proof that you are able to maintain your credit and finances in general.  Contrary to popular opinion, this does not necessarily mean that you have to have debt.  You just have to have ACCESS to credit.

This can be as simple as having a…..(sharp gasp)……credit card.  Get one without an annual fee.  Pay it off every month or don’t even use it and you won’t pay any interest.  But because you have access to credit, you are building at least basic credit history.

Yes, it really can be that easy to start building a positive credit history and corresponding credit score.

Lack of Knowledge of the Home Buying Process

As easy as I’ve just made it sound to have a credit history, it’s even easier to be educated on the home buying process.  There are a number of places to get an education.

Lenders and Realtors often provide free classes.  These are usually shorter with an element of sales pitch included.

There are online classes, but many of these are general enough to apply to the entire country.  There are enough differences between markets that a more specific class is good.

Then there are the HUD-approved home buyer classes available through non-profit agencies (like us!).  These are free classes that take a holistic look at home purchase and ownership.  We talk about budgeting, credit history and scores, loan types and process, predatory lending, and then work through the purchase process from shopping all the way through closing and maintaining your home after purchase.

Does it make a difference?  Uh….yes.  Aside from people House Closingjust knowing a lot more about the process, we have had people go from terrified of the thought before class to excited to buy after class.

That’s what education does.  The illustration I use is that education turns the lights on for you.  You know what’s out there and what is coming your way.  With that awareness, you are able to more easily and successfully navigate the buying process.

Is education required?  No.  Certainly not in enough circumstances in my opinion anyway.  Is it valuable?  Well, I’ve had lenders and Realtors both learn something by attending our classes.  Yup.  Valuable.

So there you go.  The two biggest barriers to homeownership really are addressable.  In fact, in most cases, I would even say they are usually easy to address.  You just need to reach out and take the initiative.

If you are interested in our Homebuyer Express classes, you can find upcoming classes on our calendar at LssSD.org.  You can even begin the registration process through the calendar.  If you would like more specific discussion on your unique situation, our counselors would be happy to talk with you and help you find a plan to accomplish your goals.  You can schedule a pre-purchase appointment either on our website at CFR.LssSD.org or by calling us at 605-330-2700.

 

written by Breck Miller, Community Relations Coordinator
images courtesy freedigitalphotos.net

LSS Center for Financial Resources
Consumer Credit Counseling Service | Housing Resources | Sharpen Your Financial Focus| Financial Fitness Education
705 East 41st Street, Suite 100 |Sioux Falls SD 57105-6047
605-330-2700 or 888-258-2227
www.LssSD.org
Strengthening Individuals, Families & Communities

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