The Power of Prepurchase Counseling for Homebuyers
Over a couple years, NeighborWorks America conducted this HUGE study of over 75,000 mortgages to see if prepurchase counseling works.
Between 2007 and 2009, NeighborWorks America conducted a research study based on 75,000 loans originated in that time period. The study analyzed the effect of prepurchase counseling and education provided by NeighborWorks organizations on the performance of counseled borrowers’ mortgages compared with the performance of borrowers who received no such counseling services.
The study shows that NeighborWorks America’s prepurchase counseling works.
The counseling also includes help in avoiding deceptive practices, such as misleading starter interest rates without disclosure of their later increase.
The study determined that clients receiving counseling are 33% less likely to become 90 or more days delinquent during the first two years than those not receiving counseling. This finding is consistent across years of origin, even as the mortgage market changed, and it applies equally to first-time homebuyers and repeat buyers.
So… what does this mean?
Prepurchase counseling helps homebuyers become successful homeowners, whether its their 1st or 5th home. Homebuyers knew what they could truly afford and how to avoid overpaying for mortgages- basically, counseling enabled them to make good decisions.
We’re not born experts on the homebuying process, and we’re certainly not taught it in school. So why would we expect ourselves to make good choices without studying up a bit?
At NeighborWorks of Western Vermont, we believe that knowledge is power. We know that homebuyers want to make educated decisions, so we make it easy for them to get the facts on the homebuying process. This is why we offer two types of prepurchase counseling:
You wouldn’t drive a car without taking the driver’s license test- so why would you buy a home without taking Homebuyer Education?
We offer Homebuyer Education classes, in-depth courses that cover all aspects of the homebuying process so that attendees are equipped with all the knowledge and connections necessary to make choices that are in their financial best interests.
Homebuyer Education graduates are eligible for free, one-on-one financial coaching with our financial coach, Nancy Gilman. With Nancy’s support, encouragement, and occasional guidance, clients set goals and develop steps to achieve those financial goals- whatever those may be.
Financial Coaching seeks to improve a client’s financial wellness by empowering them with the skills, tools, and behaviors to successfully manage their finances.