Are you thinking of purchasing a home, dealing with a potential foreclosure, or paying your mortgage, but need help? It might be difficult to become a homeowner and even more difficult to maintain homeownership. Luckily, there are many opportunities that you can think about. One opportunity that you can benefit from is asking for help from a HUD-approved housing counselor. A lot of people do not know the different ways a housing counselor can help their housing situation.
Housing Counselors: Who are They?
Housing counselors that received certified training are approved and backed by the Department of Housing and Urban Development (HUD). These counselors are certified to help people manage their finances in a better way, get guidance on preventing foreclosure, offer mortgage support, and more. One of the best things about housing counselors is that they are available across the United States.
What are the Different Types of Services That Housing Counselors Offer?
Housing counselors can help you with many different concerns. Some popular types of services that HUD-approved housing counselors offer are:
- Pre-Purchase Counseling
- FHA Loan Counseling
- VA Counseling
- USDA Counseling
- Reverse Mortgage Counseling
- Foreclosure Counseling
Buying a home is always a challenge, especially if it is your first time or you are insecure about your financial situation. Because of this, a lot of people request pre-purchase counseling. There is a long process that comes with purchasing a home which includes applying, the paperwork, finding a lender, a good mortgage, and so on. Housing counselors can offer information and guidance on the purchase process and more.
FHA Loan Counseling
There are some situations where a traditional mortgage might not be suitable for you. Rather, you can gain more from a loan that the government backs, which is where the Federal Housing Administration (FHA) loan comes in. One of the requirements for an FHA loan is getting housing counseling. Counselors can assist potential homeowners in figuring out their debt, budget, and so on. Once you are done with the obligatory counseling, you can get an FHA loan, if you qualify.
The Department of Veterans Affairs (VA) recognizes that veterans go through housing problems, specifically homelessness. Fortunately, according to the VA, the homelessness rate among veterans has been decreasing. On the other hand, there are homeless veterans out there and housing counseling can help with that. Housing counselors can offer the information veterans need to help out with their financial situation. If you are a veteran and you want to receive housing counseling, you can reach out to 877-827-3702 for toll-free assistance.
The United States Department of Agriculture (USDA) designed loans called the Guaranteed Rural Housing Program loans. These USDA loans might need housing counseling to receive approval. This varies based on the person, so remember that!
Reverse Mortgage Counseling
Reverse mortgages are available to qualifying senior citizens. These mortgages allow seniors to borrow the equity in their homes. If someone is looking to supplement their earnings, then they can consider a reverse mortgage. It’s important to keep in mind that not all reverse mortgages are backed by the government.
The Home Equity Conversion Mortgage (HECM) is the only government-backed reverse mortgage program. Those interested in a HECM must first consult with a housing counselor before applying for a mortgage. Counselors can provide detailed information on reverse mortgages, alternatives, eligibility, and assistance, among other things.
One goal that all homeowners share is preventing foreclosure. A lot of people believe that it will not happen to them, but no one can be certain. Millions face foreclosure, especially during times of economic decline. This is why it is important to go through foreclosure counseling. Homeowners who are struggling can find assistance from housing counselors to prevent foreclosure. If you are finding it hard to properly manage your monthly payments, you should reach out to a housing counselor as soon as possible.
Housing Counselors Cannot Offer Any Kind of Guarantee
Remember that a housing counselor can only give you advice based on the details you provide. They cannot make any sort of guarantee, especially if you are facing foreclosure. In that case, you should consult with an attorney to ensure that all of your bases are covered.
As always, make sure that you are only contacting HUD-approved counselors. You don’t want to pick a random agency because you’ll be giving them a lot of sensitive personal information that you shouldn’t share with just anyone.
How Do Housing Counselors Operate?
Everything that takes place happens in steps. If you are interested in receiving assistance from housing counseling, then there are three steps to follow:
- First, you need to look for counselors that the HUD approves of. You should do your research on counselors before you choose which one to go to.
- Secondly, when you make a decision on a housing counselor, you will need to reach out.
- Finally, presenting information. Housing counselors will ask for information about your finances to help you. You might need to offer documents to explain your situation. Once you gather all of your documents, they can offer information and potential resolutions to your problem.
Finding a Housing Counselor
Individuals can contact a HUD-approved housing counselor in a variety of ways. Individuals can:
- Look Them Up Online: HUD’s website is a great resource for people who are interested in housing counseling. Users can search for counselors through different filters like using a map or even a specific zip code!
- Call Them: There are several phone numbers available, starting with the HUD housing counselor agency locator at 800-569-4287 or the HOPE Hotline at 888-995-4673.
- Download the Phone App: The HUD offers the option of downloading the HUD Resource Locator app on the App Store. You can find contact info and areas that have available HUD resources in your area.
It is not important how you look for options: what is important is that you look. After you’ve completed your search and compiled a list of counselors, you should research the options you’ve chosen. While all HUD-approved counselors are reliable and legitimate, some specialize in particular areas. If you want to get a reverse mortgage, for example, a budgeting counselor may not be as helpful as one who specializes in reverse mortgages. That is why it is critical to research the counselors you have chosen!
Understanding What Would Happen If You Reached Out to a Housing Counselor
A housing counselor will likely ask you questions about personal details like:
- Home loan information (which includes mortgage terms)
- Payment history
- Other relevant details about your housing situation
They will almost certainly require documentation regarding your financial situation. All of these details help the housing counselor understand how to best assist you.
Documents That You Should Present
Housing counselors require you to provide financial information in order to offer help. Make sure that you present the following documents, in case they ask you for it:
- Tax returns
- Proof of income (like pay stubs)
- Financial statements
- A list of things you spend money on per month
- Mortgage payment information
How Much Does It Cost for Housing Counseling?
Following the law, housing counselors are supposed to charge their clients with affordable fees, in exchange for their services. However, the housing counselor needs to meet the HUD requirements below:
- They are not allowed to ask for hidden fees for any extra services. First, they need to let the client know that the extra services are not included in the original price.
- The services and fees must be proportional to one another.
- When someone cannot pay the fee, the agency should offer counseling for free.
Make sure that you gather all of the documents you need and bring them with you for your counseling session.
There are a lot of different aspects that come with housing counseling which can lead to a bunch of questions.
What is the Eligibility Criteria for Housing Counseling?
These sessions can help anyone, not just those who are in a tight housing spot. The only requirement that housing counselors have is that they do not charge fees for foreclosure or homeless prevention counseling. Each agency is different from another, so agencies can waive fees on other services.
Can Housing Counseling Actually Help People Out?
Yes! There is a lot of information that proves the positive effect housing counseling has:
- Foreclosure Prevention Counseling: People who get foreclosure prevention counseling have a 70% higher likelihood of being able to gain back control of their payments after getting into foreclosure.
- Pre-Purchase Housing Counseling: Those who go through pre-purchase housing counseling are 42% less likely to deal with foreclosure.
- Financial Literacy Assistance: Those that receive financial literacy support managed to increase their savings by an average of $362.
The Bottom Line
For those who want to improve their finances, housing counseling is a great resource to consider. The best part is that anyone can benefit from housing counseling. A lot of different types of housing counseling are out there. If you want to hire a housing counselor, you should look into the options in your area. However, you should do your own research on the options you want so that you can make the most of these sessions. When you pick a counselor, we suggest that you gather documents you might need and a list of questions for the counselor. Also, find out why you want housing counseling. This type of support could help you out more than you think!