Do Homeowners Know Their Mortgages?

Do homeowners understand their own mortgages? Some Federal Reserve Board researchers looked into the question for a recent paper, and the results are sadly close to what you might expect. People have a sense of the value, but they get lost on the important esoterica:

We find that most homeowners appear to report their house values and broad
mortgage terms reasonably accurately. Some adjustable-rate mortgage borrowers,
though, and especially those with below-median income, appear to underestimate
or not know how much their interest rates could change.

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Comments

  1. Ha — consistent with this WSJ page 1 story Saturday:
    Millions Are Facing Monthly Squeeze On House Payments
    http://online.wsj.com/article/SB114204536747195612.html
    Its as if they didnt see it coming . . .

  2. fartikus says:

    want to buy some swamp land in florida?
    want to buy some stock in this .com?
    want to get a reeeeaaaaally cheap mortgage?
    every generation falls prey to a heavily sold financial product for a simple reason – they look attractive on the surface and they are highly profitable for the seller.
    americans are obsessed with consumption. every generation has wanted to better their position and comforts, but even in my lifetime (born 1970) i don’t recall a full-on expectation of all of the trappings of wealth for everyone with a job and credit card. so the aggresive mortgages play to this…..want to get a 1800 sq ft home or a 4000 sq ft home? we can help! oh its very cheap. sign here. by the way on the back of this form you will see some information of how your payments may be adjusted due to external circumstances. don’t worry, it probably won’t affect you, you’ll be fine.