Independent Study Says Pre-Purchase Counseling Works
NeighborWorks America last week announced findings from a new independent study, which found that homebuyers who receive pre-purchase counseling and education are one-third less likely to become seriously delinquent within 24 months of loan origination. Not only does that bode very well for homeowners who, with the proper guidance, are experiencing homeownership success, it may also make counseling a more attractive offering for lenders, who can suffer losses estimated at more than $50,000 if a delinquent loan goes into foreclosure.
This study is the latest of several that validate the effectiveness of foreclosure prevention and pre-purchase housing counseling (see here and here). With so much positive, independently analyzed and verified data highlighting the benefits of housing counseling, it makes the case that every homeowner should have access to a nonprofit counselor, whether they are in distress or just getting their feet wet in the home buying process. In fact, this most recent study even found that repeat homebuyers who complete pre-purchase counseling are able to avoid delinquency more than those who do not participate in a counseling program – proving that even the experienced can use an ally when considering various mortgage options.
The NeighborWorks release also touched on a report from the Bipartisan Policy Center’s Housing Commission, which said that “housing counseling can improve prospective borrowers’ access to affordable, prudent mortgage loans, especially for families that otherwise might not qualify or who may experience other barriers to mainstream lending.” The report itself mentions data from NeighborWorks’ National Foreclosure Mitigation Counseling program (NFMC), noting “counselors can also be an ally in the event of an unexpected financial change and can start the conversation with a lender about ways to help struggling homeowners.”
These studies do more than reiterate that housing counseling works; they also send the message that homeownership can still be a very viable option for those who are mentally and financially prepared. Many people who witnessed the housing market collapse are nervous about pursuing homeownership, fearing that they too might end up facing foreclosure or trapped in an underwater mortgage. These fears, while very real, can cause even the most prepared consumer to ignore the many advantages of homeownership, which includes building equity in your home, tax savings, and, on a more personal level, creating a home for your family and becoming a contributing member of a stable neighborhood or community. It’s important that prospective homeowners do a lot of research and take everything into consideration – the good and the bad – so that they can make a truly informed decision.
HPF currently offers free foreclosure prevention counseling to struggling homeowners and is working with several lenders and organizations on pre-purchase counseling programs that help homeowners before they sign on the dotted line. For more information, call 888-995-HOPE (4673) to speak with a housing counselor today.