Take a Class, Get a Cheaper Mortgage

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First-time homebuyers can save up to $10,000 on their FHA home loan by taking a homeownership class.

You know the saying “knowledge is power.” For first-time homebuyers who complete the Homeowners Armed with Knowledge (HAWK) program, that knowledge is power in the form of powerful home loan savings.

HAWK participants who get a Federal Housing Administration home loan will get a reduced rate for mortgage insurance premiums. According to The Palm Beach Post, borrowers who take the classes can save up to $325 a year, or about $10,000 over the life of their home loan.

“It may not seem like it, but $10,000 is a lot of savings for a $30,000-a-year household,” said Kimber White, state government affairs chairman for the Florida Association of Mortgage Professionals. “It can make the difference between qualifying or not qualifying to buy a home.”

The HAWK housing counseling is aimed at improving homebuyers’ housing decisions and budgeting skills. The basis of the program is that when borrowers have a good understanding of what is involved with homeownership, they are less likely to default on their home loans, which in turn reduces the risk for the FHA, which insures the home loans.

In fact, Mortgage News Daily says, “Borrowers who receive counseling have a delinquency rate that is 29 percent lower for first-time homebuyers and 15 percent lower overall than borrowers who do not.”

According to a statement from the U.S. Department of Housing and Urban Development:

A healthy housing market is key to a sustainable economic recovery and the economic crisis significantly constrained credit, making it tough for anyone with less than perfect credit to obtain a mortgage. Shutting these creditworthy borrowers out of the market hurts American families and undermines efforts to build more stable communities, create pathways to the middle class, and increase homeownership opportunities for minority and low-wealth borrowers.

Under HAWK, homeowners who complete the housing counseling before they obtain a home loan will earn a 50 basis point reduction in their upfront FHA mortgage insurance and a 10 basis point reduction in the annual premium cost.

If the homeowner has no delinquencies in the first two years, they will receive an additional 15 basis point reduction. According to The Palm Beach Post:

“If you talk about the long-term impact and how much it will save homeowners, this will absolutely help,” said Kevin Maher, who teaches first-time homebuyer classes and is the community outreach director for West Palm Beach-based DebtHelper.com. “I think this will bring more people to the homebuyer classes, which will help them make better decisions.”

A public comment period on the HAWK program will end in August, and borrowers will likely be able to apply for the program by year’s end.

Would you devote your time to a series of classes to receive a discounted home loan? Share your thoughts below or on our Facebook page.

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