A new study is confirming what intuition and common sense already suggested: homeowners who went through pre-purchase counseling were less likely to fall behind in their mortgage payments than those who didn’t.
“Pre-purchase counseling and education works,” concluded researchers who looked at more than 75,000 loans by national affiliates of the Neighborhood Reinvestment Corporation between October 2007 and September 2009.
“The finding is consistent across years of loan origin, even as the mortgage market changed in a period of financial crisis. It applies equally to first-time homebuyers and to repeat buyers. And it holds after controlling for a large set of characteristics of borrowers and their credit histories, mortgages and housing markets.”
The Maryland Mortgage Program, the state’s flagship homeownership program, requires pre-purchase counseling on all its loan products, one of the program’s key selling points for prospective homebuyers and lenders alike.
In fiscal year 2012, 1,450 families purchased homes through the Maryland Mortgage Program, a 29 percent increase over fiscal year 2011. Learn more about why historic low interest rates, exciting new loan products and significant downpayment and settlement cost assistance makes the Maryland Mortgage Program an attractive option for more and more buyers.
The new study “Pre-Purchase Counseling Impacts on Mortgage Performance” was prepared by Neil S. Mayer and Kenneth Temkin for NeighborWorks America.
It joins a growing body of research on the efficacy of counseling, including a series by the U.S. Department of Housing and Urban Development. Those studies looked at the effectiveness of pre-purchase counseling and foreclosure prevention