Do Homeowners Know Their House Values and Mortgage Terms?
Karen M. Pence
Board of Governors of the Federal Reserve System
Consumer Financial Protection Bureau
FEDS Working Paper No. 2006-03
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.
Number of Pages in PDF File: 39
Keywords: Mortgages, house prices, Survey of Consumer Finances, financial literacy
JEL Classification: E21, G21, D14, D12
Date posted: May 2, 2006