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Monday, May 15, 2006

Pence and Bucks on Homeowners' Knowledge of Home Value and Mortgage Terms

Karen M. Pence ande Brian Bucks (Board of Governors of the Federal Reserve) have posted Do Homeowners Know Their House Values and Mortgage Terms? on SSRN.  Here's the 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.

Ben Barros

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