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Investing and Economics Blog

Ignorance of Many Mortgage Holders

Mortgage ignorance rampant

In the survey of 1,004 adults conducted by Gfk Roper, homeowners with mortgages were asked what type of mortgage they had. A stunning 34 percent of the homeowners had no idea. “That’s a symptom of the complexity of the mortgage market today,” says Ken Wade, chief executive officer of NeighborWorks America, a nonprofit organization that provides financing and training to neighborhood-based housing organizations.

Sorry but that is a symptom of massive ignorance. Not knowing an incredible important aspect of your largest financial decision is like not know what days you are suppose to show up for work. There is a minimum amount of knowledge people should have that sign a mortgage. I think at least 34% of mortgage holders need to read this blog. Ok, I probably alienated all of them, so if that is the case then they should read some of the blogs we list in our blogroll.

Nationwide, 36 percent of homeowners who now have an ARM said they planned to refinance to a fixed-rate loan when their ARM changes. Only 2 percent planned to refinance into another ARM.

There is a big problem in that logic – it could maybe make sense if you had good reason to believe rates will be lower in the future than when you took out the loan (but that is a very questionable). I don’t know why someone would think that in the last couple of years – the risks have been much better than rates would go up a few hundred basis points than down that much. Basically I can see someone that is very financially savvy using an adjustable mortgage to qualify and if they know they will move in a fairly short period…

Related: Learning About Mortgages – Mortgage Defaults: Latest Woe for Housing – How Not to Convert Equity – 30 year fixed Mortgage Rates

July 11th, 2007 John Hunter | 8 Comments | Tags: Financial Literacy, Personal finance, quote, Real Estate

Comments

8 Comments so far

  1. Your Home as an Investment at Curious Cat Investing and Economics Blog on January 19, 2008 5:56 pm

    Additionally, you lock in a large part of your housing cost (you still have maintenance and taxes but you do not have every increasing rent. Now ever increasing rent is not a certainty but for many it is very likely rent will go up on average over the long term…

  2. Starting Retirement Account Allocations for Someone Under 40 at Curious Cat Investing and Economics Blog on February 10, 2008 5:48 pm

    25% Total stock market index (~Wilshire 5000)
    25% international stocks
    20% small cap stocks
    …

  3. Foreclosure Filings Continue to Rise at Curious Cat Investing and Economics Blog on June 14, 2008 9:55 am

    The numbers really are astounding. How lame were the decisions of banks and mortgagees that nearly 1 in 40 mortgages are in default (and that number likely increasing in the next year to much more…

  4. Fed Plans To Curb Mortgage Excesses at Curious Cat Investing and Economics Blog on June 15, 2008 9:21 pm

    The Mortgage Bankers Association (MBA) really expects anyone to pay any attention to their opinions. They have someone managed to create a threat to the economy so large that $90 a barrel oil is not the threat to the economy people are worried about.

  5. JPMorgan Chase Freezes Mortgage Foreclosures at Curious Cat Economics Blog on November 2, 2008 12:22 pm

    FDIC Chairman, Sheila Bair, has been encouraging banks to take such action and instituted such action on the mortgages the FDIC acquired when they took over Indymac…

  6. Securities Investor Protection Corporation at Curious Cat Investing and Economics Blog on December 16, 2008 12:23 am

    […] Teaching Children About Money Matters – Ignorance of Many Mortgage Holders – Financial Illiteracy Credit Trap December 16th, 2008 by John Hunter | | Tags: Financial […]

  7. Lowest 30 Year Fixed Mortgage Rates in 37 Years at Curious Cat Investing and Economics Blog on December 22, 2008 8:44 am

    […] Ignorance of Many Mortgage Holders – How Not to Convert Equity – Your Home as an Investment – Nearly 10% of Mortgages Delinquent or in […]

  8. Singapore Housing: Most Expensive and Most Affordable? | Singapore on July 1, 2012 10:33 pm

    […] Iskandar (Singapore Suburb, in Malyasia) Housing blog – Ignorance of Many Mortgage Holders – Home Values and Rental Rates This entry was posted in economy, Living, Lodging and tagged […]

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