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Do Homeowners Know Their House Values and Mortgage Terms?

Karen M. Pence
Board of Governors of the Federal Reserve - Household and Real Estate Finance Section

Brian Bucks
Federal Reserve Board

March 2006

FEDS Working Paper No. 2006-03

Abstract:
To assess whether homeowners know their house values and mortgage terms, we compare the distributions of these variables in the household-reported 2001 Survey of Consumer Finances (SCF) to the distributions in lender-reported data. We also examine the share of SCF respondents who report not knowing these variables. 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.

Keywords: Mortgages, house prices, Survey of Consumer Finances, financial literacy

JEL Classifications: E21, G21, D14, D12

Working Paper Series

Date posted: May 02, 2006 ; Last revised: May 02, 2006

Suggested Citation

Pence, Karen M. and Bucks, Brian, Do Homeowners Know Their House Values and Mortgage Terms? (March 2006). FEDS Working Paper No. 2006-03. Available at SSRN: http://ssrn.com/abstract=899152

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Contact Information

Karen M. Pence (Contact Author) Board of Governors of the Federal Reserve - Household and Real Estate Finance Section ( email ) Washington, DC 20551 United States 202-452-2342 (Phone) 202-728-5887 (Fax)
Brian Bucks Federal Reserve Board ( email ) 20th Street and Constitution Avenue NW Washington, DC 20551