The global coronavirus (COVID-19) pandemic has brought about challenges and economic uncertainty that current and future homeowners must navigate. A solid understanding of credit, financing, the mortgage process and budgeting, among others, is more important than ever to attain and maintain a home.

Financial education can provide borrowers and homeowners with information and resources to better understand and prepare for owning a home. Freddie Mac experts reveal key gaps in financial education, ways Freddie Mac is working to elevate awareness, and how housing professionals can provide valuable support to their clients and potential homebuyers.

1. Education Helps Homebuyers Create an Effective Process

“Financial education is extremely important—unfortunately a lot of homebuyers realize the importance and benefits after they purchase their home. However, such (education) programs can help prospective homebuyers create an effective plan to understand their budget, the mortgage process, and examples of how others have become homeowners.”

  • Carmen Mercado, Senior Manager of Single-Family Affordable Lending

2. Education Prepares Borrowers for Homeownership

“Anyone can benefit from homebuyer education—it doesn’t matter if you’ve owned a home or are a first-time homebuyer. Lenders benefit from it since their clients who go through homebuyer education are much readier to buy a home. When lenders work with a housing counseling agency that provides education, the person being referred is more ‘mortgage-ready.’”

  • Stacey Walker, Director of Single-Family Corporate Relations and Housing Outreach

3. Education Encourages Credit Awareness

“The biggest financial education gap for potential borrowers is lack of awareness of their own credit. Also, the gig economy, where people may have three or four gigs, is something the industry is grappling with because a full-time job with a W-2 is typically what you need to get a mortgage. However, there are solutions that can help with the verification of self-employed income.”

  • Samuel Luna, Senior Director of Single-Family Affordable Lending

4. Education Nurtures More Confident Homebuyers

“Financial education can create more awareness and alleviate many of the anxieties first-time homebuyers feel. Ongoing education focused on credit, budgeting and preparing for unexpected expenses can make current and prospective homeowners more confident and comfortable because they are informed and prepared.”

  • Mike Dawson, Vice President of Affordable Lending Strategies and Initiatives, Single-Family Client and Community Engagement

5. Education Improves Overall Understanding of Financing, Credit and Planning

“When it comes to financial education, it’s not always something that people sit down and teach their children. An overall understanding of financing and credit and planning—whether for homeownership or retirement—is critical.”

  • Dennis Smith, Manager of Single-Family Affordable Lending and Access to Credit

6. Education Helps Borrowers Sustain Homeownership

“From a financial literacy standpoint, owning a home comes with benefits is like building equity. But it also comes with responsibilities like being prepared for unexpected expenses such as roof repairs or pipes that burst. Understanding the responsibilities associated with owning a home and learning how to financially prepare to meet those responsibilities is important to sustain homeownership.”

  • Dan Ticona, Senior Manager of Single-Family Affordable Lending Strategy and Policy

7. Education is Available in Many Formats from a Variety of Trusted Sources

“From a financial management standpoint, Freddie Mac offers resources such as CreditSmart®. In many communities, local banks, credit unions, community groups and even faith-based organizations also offer resources for counseling borrowers. In addition, there are a number of nonprofit organizations available to help homebuyers by providing resources ranging from counseling and education to down payment assistance. Getting financially educated is important – look around and ask questions to find the best possible help.”

  • Brian Culhane, Director of Sales—Affordable Lending, Single-Family Client Experience

 8. Education Dispels Myths and Reveals Opportunity

“A lot of our research is based on educating people on saving for a home and financial awareness. This is to help homebuyers know that it’s not as daunting as they may think.”

  • Cindy Waldron, Vice President of Research and Analytics, Single-Family Client and Community Engagement

As borrowers navigate an uncertain climate and financial hardships, lenders and other housing professionals can help by providing them with the education and resources they need to make informed decisions.

Learn more about financial education solutions and resources for helping borrowers navigate the challenges of obtaining credit and becoming homeowners.