First-Timers Go to School, Buy a Home

BOISE, Idaho — Meckenzie and Brody Miller were almost ready to buy their first house. They were pre-approved for a loan, they had chosen a home and agreed on a price.

Now all they had to do was go to school.

The Millers took advantage of a growing trend in real estate loans -- in exchange for attending home-buyer education classes, they were granted the money for their down payment.

It’s a system that not only eases the financial burden of first-time buyers, but reduces the risk taken by lenders because few homeowners who attend the classes default.

Lucien Semaha, a manager with Neighborhood Housing Services, administers Finally Home! classes in the Boise area as part of the national NeighborWorks network -- a group of organizations operating under the umbrella group Neighborhood Reinvestment Corp., created by an act of Congress in 1978 to revitalize the nation’s communities.

“People who attend home-buyer education are better risks and they know how to manage their life as a homeowner better,” Semaha said. “I would say 99.9% of people who are delinquent on their home loans did not receive home-buyer education.”

Residents of any city can contact a local office to see if they qualify for assistance under the program, said Richard Castro, a management consultant with Neighborhood Reinvestment Corp. in Anaheim. Although the criteria to qualify varies from place to place, Castro said low- and moderate-income applicants are rarely turned down.

“They just come in for an appointment and we basically identify what their needs are. Some cities provide down payments for people that make less than 80% of the median income, and other lenders make that available to people between 80% and 120% of the median,” he said.

When people have credit problems, Castro said, counselors teach them how to raise their credit rating so they can get a loan later.

Nearly everyone attends the homeowner education classes.

The three-day, three-hour-long classes in Boise cover the basics, starting with the costs of buying and ending with tips on preventing foreclosure. In between, presenters discuss mortgages, credit, home inspections, maintenance and other details.

For Meckenzie, 22, and Brody, 26, the classes meant they could move out of their rented trailer and into a three-bedroom home for just $500 out of pocket. They received a $2,500 grant -- enough to cover the down payment on their $97,500 home.

Without the grant, Meckenzie Miller said, it would have taken them at least two years to save enough for a down payment.

“We wouldn’t have been able to get a house until my husband was done with school. He can finish school faster this way because he’s not breaking his back so much to make that money,” the stay-at-home mother said.

Their house payments are $512 a month, cheaper than most of the apartments that the Millers considered.

Meckenzie Miller said the class helped them find errors in the closing contract that could have cost them money.

The Millers wish that they had taken the class sooner -- they had never heard of home inspections before and had not budgeted for one. After the class, she worried that their property could have hidden problems.

The comment is one that Semaha often hears. Although the classes are free, he said, people often do not attend until they are within days of closing the loan. That cuts it close when grant money or low-interest rates are hinged on class completion.

“Only if prospective home buyers are informed do they have more power,” Semaha said. “Nobody should downplay the importance of home-buyer education. Knowledge is power.”

Some lenders are attracted to the program because it lowers default rates and teaches consumers to make better choices when they select a home loan.

“It’s very important for people to make educated decisions for any major purchase,” said Cindy Williams, community development manager for U.S. Bank in Boise. “And it’s a good service for us because it makes the borrower stronger.”