Can Poor Math Skills Effect Your Chances of Foreclosure

photo credit: go thunk yourself

A new study by assistant business professor, Stephan Meier from Columbia University finds that people with poor math skills have a high rate of foreclosures, three times higher in fact. Mr. Meier was not surprised with the findings he stated, but he was surprised at the dramatic connection between math skills and foreclosures.

A larger study in Great Britain resulted in almost identical findings when questioned about retirement savings. Roughly 340 borrowers participated in the study. They were asked to divide 300 by 2 and to calculate 10 percent of 1,000. Approximately 16 percent of the participants answered at least one of the questions wrong. 21 percent of the participants with below average math skills were in foreclosure.

It pays to understand math, mortgage rates, and financial processes. Mr. Meier suggested adding math tests to the mortgage lending process or simply helping borrowers improve their financial understanding.

I guess our parents and teachers were right all those years. We undertake a lot of obligations throughout our life, many of which are financial. Richard L. Tracy Jr., Chief executive of Campbell Mortgage in West Haven, Conn. said that borrowers deficient in areas of math would most likely also have weak credit scores.

The idea is that if we learn some basic math skills we can understand our personal finances and budget our money better, and we will be more likely to meet our financial obligations.

Read full article from the New York Times

Posted on June 19, 2010 11:52:18 by Blog Author