Homeowners Don't Know Nothing About Their Mortgages

[Valerie S. Johnson]

By Valerie S. Johnson

What kind of mortgage do you have? Traditional 30 year fixed rate? Fifteen year fixed rate? Adjustable rate (ARM)? Interest only? It’s a critical detail because it determines how much you will pay each month over the life of the loan.

However, Bankrate.com recently reported that a survey conducted by Gfk Roper found that more than one third of respondents with mortgages didn’t have a clue what type of mortgage they had. How could they not know such an important detail about their personal finances? It’s like having a job but not knowing how much your salary is and whether it will increase or decrease at any time.

In the same survey, homeowners with adjustable rate mortgages were asked what they planned to do when their interest rate adjusts. More than a third planned to refinance to lock in a fixed rate mortgage. But an almost equal number said they didn’t know what they were going to do. Depending on when they bought their homes or refinanced, mortgage rates could be dramatically higher when the loan adjusts. What will they do then?

The full story is available at Bankrate.com.