Borrowers who complete homeownership education programs make better refinancing decisions

In light of the subprime mortgage crisis that has resulted in extraordinarily high default rates on home mortgages, one might wonder what the government can do to better educate new potential homeowners.

A recently published article appearing in the Journal of Policy Analysis and Management found that borrowers who complete homeownership education and counseling (HEC) programs are more informed about when to make refinancing decisions. The effectiveness of education and counseling varies by the type of program.

Researchers surveyed low-income homeowners who purchased a home between 1999 and 2003. They then observed loan performance through the first quarter of 2006, a period of strong growth in home values and steady decreases in interest rates.

Homeowners had completed a variety of different types of homeownership education and counseling from multiple providers across the United States. The type and quality of these programs greatly varied, ranging from intensive classroom-based instruction with individualized attention, to telephone-based counseling, and home study.

Borrowers who completed the HEC programs were more responsive to the financial incentive to refinance than other borrowers. Specifically, borrowers who participated were more likely to refinance when they could lower their interest rates and by doing so, less likely to refinance during periods when it was not financially beneficial.

The study also found that the impact of education and counseling programs is specific to programs that include classroom-based instruction and/or individual counseling. Programs based on home study or telephone counseling did not show similar impacts.

Source: Wiley

Related stories:

New research shows employer-based weight loss programs are helpful
A new review of studies from the University of Cincinnati (UC) shows that a little shove from the workplace may actually be the ticket to dropping weight.
Heart patients find education programs lead to better health
Older women heart patients benefit from educational programs as a supplement to clinical care to help significantly lower cardiac symptoms, lose weight and increase physical activity, a new study shows.
Finding the right words: Provider-patient discussions can help domestic violence victims speak up
Researchers at University of Pennsylvania School of Medicine and other sites have found that doctors and other health care providers can better their chances of identifying and helping victims of domestic violence by changing the way they ask patients questions.
Treating patients with psychiatric disorders for hepatitis C
People with severe mental illnesses are far more likely to be infected with Hepatitis C virus compared to the general population, however, they often do not get treatment for their liver disease because current antiviral therapies have known psychiatric side effects.
1 in 2 adults at risk for painful knee arthritis
A landmark government study suggests nearly one in two people (46%) will develop painful knee osteoarthritis over their lifetime, with the highest risk among those who are obese. According to the Arthritis Foundation, the study underscores the immediate need for the public to understand what they can do to reduce the tremendous pain, disability and cost associated with arthritis.
Researchers use virtual reality to study complexities of dizziness
Think back to when you slipped on the ice or in the shower: the ground rushing up, your feet shooting out, terror building even as your mind is working a mile a second to plot a soft landing.
Health of Afghan children jeopardized by family behaviors, not just war
Family values and ongoing conflict within the country are dramatically affecting the health of young children in Afghanistan. A study published in the open access journal BMC Public Health suggests that poor child health can be linked to a lack of maternal education and a lack of autonomy for mothers when seeking healthcare for their children. In addition, mothers who were married as children tend to have offspring with poorer health.
Treadmill exercise retrains brain and body of stroke victims
People who walk on a treadmill even years after stroke damage can significantly improve their health and mobility, changes that reflect actual "rewiring" of their brains, according to research spearheaded at Johns Hopkins.

News discussion:

General Science news