Fannie Mae and Freddie Mac believe that educating homebuyers about the homeownership process will help prevent lending mistakes, however new studies question the effectiveness of homebuyer education efforts.
I’m truly of the belief that homebuyer counseling can help prevent some of the mistakes made during the housing boom. Freddie Mac officials stated in their publication Insight and Outlook that there was sometimes conflicting or inconclusive results and raised questions about the effectiveness of borrower education and counseling.
A study of 40,000 participants in Freddie Mac’s Affordable Gold Loans Program, for example, found that borrowers who underwent classroom and home study counseling was found to reduce serious delinquency by 34 percent.
As in anything today, critics question whether the reductions are linked to the education.
“Perhaps the borrowers who received counseling also were more high-educated than the borrowers in the other group.” “Maybe they had a greater disposition or ability to apply the information provided by the education course. Maybe they had a higher credit scores than the other borrowers.”
A 2014 study by the Federal Reserve Bank of Philadelphia evaluated first-time homebuyers who received prior counseling to purchase a home over a 5 year period. the counseling included one-on-one instruction on budgeting and the home buying process, as well as a 2 hour pre-purchase workshop that included information about applying for a mortgage, shopping for a home and closing. The buyers raised their credit scores on an average of 16.2 points after the training, the study found.
As a mortgage broker I did counseling with many first time homebuyers to prepare them to get a mortgage and to learn what they needed to know about home ownership. To have them plan for all the costs of maintaining a home both financially and physically. Also to teach them what closing costs were and what amount of money they are going to need besides the down payment money.
If you or any one you know is in need of real estate advice please do not hesitate to contact me.
Thanks for reading this.
Donna Bishop Realtor call me at (239) 560-3149 or email me; firstname.lastname@example.org