Homebuyer education could help underbanked individuals become homeowners

Those who belong to the sizable demographic group of underbanked or unbanked Americans are at times subject to misconceptions by those in banking and finance, or may end up the victim of surplus-level caution on the part of lenders. The latter instinct is understandable, considering that overzealous lending to unqualified applicants - and a lot of other considerably more unscrupulous or corrupt actions - created the perfect storm leading to the 2008 financial crisis.

"Underbanked consumers should not be disregarded by today's lenders."

Yet 2008 is almost a decade in the country's rearview mirror. Though its lessons must remain fresh in our minds, they also shouldn't dictate the overall direction of lending behavior. Some institutions appear to be adopting a new approach to assist customers with either knowledge gaps or credit issues that might keep them from securing a mortgage - homebuyer education.

Instilling responsible credit habits in consumers 
According to HousingWire, homebuyer education courses are becoming more common due to the industry-wide realization of knowledge deficiencies among a greater share of Americans than had been previously anticipated. In many instances, would-be homebuyers aren't submitting problematic applications because they're unwilling to get their financial ducks in order. The issue is that they often aren't readily able to learn what that order should be. 

Homebuyer education addresses this by covering, in great detail, essential steps such as:

  • Realistic budgeting.
  • Credit and documentation requirements.
  • Arranging for a home inspection.
  • Negotiating and closing a down payment. 

Underbanked individuals who choose to try such courses can avoid running into hurdles such as complicated mortgage disclosure stipulations, missing or incomplete documentation and credit issues.

Seeking and finding homebuyer training 
Various nonprofit organizations, as well as government agencies like the Department of Housing and Urban Development, sponsor crash courses in proper home purchasing. NeighborWorks America is one of the prominent nonprofits helping to provide this service, and HUD has endorsed its specific trainings. As U.S. News & World Report noted, some of these classes are free, but the ones that have a cost attached are often quite reasonably priced

Lenders who encounter credit applicants with reasonable incomes but with confusion about the homebuying process itself will ultimately serve their organizations' own bottom lines by directing such individuals to take courses that fill in the blanks of any knowledge gaps. The consumers in question may well remember who gave them this service and return to take out a loan with the institution. 

On a similar note, using alternative credit data solutions can also help determine the creditworthiness of underbanked individuals. Contact Microbilt today to learn more. 

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