Do Homeowners Know Their House Values and Mortgage Terms?

Pence, Karen M.; Bucks, Brian

doi:10.2139/ssrn.899152

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Do Homeowners Know Their House Values and Mortgage Terms?

FEDS Working Paper No. 2006-03

39 Pages Posted: 2 May 2006

See all articles by Karen M. Pence

Karen M. Pence

Board of Governors of the Federal Reserve System

Brian Bucks

Consumer Financial Protection Bureau

Date Written: March 2006

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 Classification: E21, G21, D14, D12

Suggested Citation: 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: https://ssrn.com/abstract=899152 or http://dx.doi.org/10.2139/ssrn.899152