The way Tim Monzello sees it, buying your first home is a lot like being a new parent.
"You're going into both experiences blind," said Monzello, 34, who recently moved into his first home in Asuza and has an 8-year-old son. "You're hungry for any information that will make you a better home buyer or parent," he added.
Before they bought their three-bedroom, $130,000 home, he and his wife, Karen, 31, gathered all the information they could on what they consider the most important purchase they'll ever make.
A critical part of their research included attending classes for new home buyers.
Usually given by mortgage lenders, real estate agents and various nonprofit groups, new home-buyer classes are held throughout Southern California and across the United States.
The classes are designed to better educate consumers about the home-buying process and the responsibilities of home ownership, with the goal of reducing home loan defaults.
Depending on lender requirements, the classes can be mandatory for prospective homebuyers who want to qualify for loans of 5% down or less. Students are often given financial incentives for attending the class, such as down payment or closing cost assistance.
Given in a variety of formats, the classes are usually four to eight hours in length and held on Saturdays or in the evenings, although home study is sometimes available.
There are no rigid guidelines as to how the classes should be structured, but when finished, attendees must be proficient in how to shop for a home, how to obtain a mortgage and the responsibilities of homeownership.
The concept of home-buyers classes was devised in 1989 when Fannie Mae made a commitment to make homeownership more available to low- and moderate-income renters. Fannie Mae teamed up with several mortgage insurance companies, including GE Capital Mortgage Insurance Corp. in Raleigh, N.C.
"In return for educating consumers about homeownership, we felt we could be more flexible in terms of underwriting guidelines," said Mike Kachel, spokesman for GE Capital.
"The home-buyers classes are designed to teach homeowners not to overextend themselves and not to purchase a home with hidden problems. So far, our portfolio of these loans has been profitable and [has] proven that education does work."
In 1990, the home-buyers classes became available nationally and since then more than 300,000 families have benefited from the program, said Julie Gould, vice president for housing impact for Fannie Mae in Washington, D.C.
Over the last five years in the Los Angeles area alone, homes worth $3.3 billion have been sold to low- and moderate-income buyers, said Barbara Sandoval, deputy director of the Los Angeles Partnership office of Fannie Mae.
The Monzellos attended their home-buyers class at the suggestion of their real estate agent, Jim Malone.
"I refer all my first-time home buyers to the classes," said Malone, who is with Ken Turner Real Estate in Glendora. "The program saves them money and gives them valuable information about homeownership."
To prospective home buyers like the Monzellos who take advantage of the classes, the sessions help simplify what is often seen as a confusing and daunting process.
"We had talked to people about buying a home, but until we went to our first home-buying seminar and got an idea of what was really involved, it was a nebulous process in our minds," said Tim Monzello, who attended his first home-buyers session in June 1996, and another four months later.
"Once we went to a home-buyers class, we didn't feel like we were going into [home buying] blind anymore," he said. "We had an understanding of things like credit needs, budgeting and the timeline involved in a loan."
In the classes, experts discuss qualifying for a loan, covering issues such as how much house a buyer can realistically afford, the down payment, minimum income requirements, budgeting and how credit affects loan approval. Class participants also learn how the loan process works, including definitions of terms such as appraisal, escrow, underwriting, title and closing.
The typical person or couple attending a seminar is a year or two away from buying a home, said Ginger Bengochea, director of counseling and housing for Santa Ana-based Consumer Credit Counseling Service (CCCS) of Orange County.
A nationwide nonprofit agency that provides money management and debt counseling, CCCS has teamed up with Chase Manhattan Mortgage Corp. to provide free home-buying sessions throughout the United States.
By educating prospective homebuyers, "we're trying to present alternatives to foreclosure classes, which are usually really well-attended," Bengochea said.
"Most new home buyers could benefit from the class because home buying isn't a skill that is taught in school," said Cora Fulmore, director of housing for the National Foundation for Consumer Credit, in Silver Spring, Md., the national arm of CCCS.