How Well Do You Know Your Mortgage?

34% of homeowners do not know what type of mortgage they own, according to a Bankrate.com poll released this morning. That's an incredible statistic. In this current climate of mortgage panic and subprime implosion, isn't every homeowner at least a little worried about where their own home loan stands? It only gets worse as the survey results go on:

- 28% of homebuyers worry about how they will afford their payments next year.
- 34% of homebuyers with an adjustable rate mortgage (ARM) don't know what they will do when their loan readjusts.

Holy cow. This does not bode well for the mortgage market in the coming months. A huge volume of ARM loans are scheduled to have their rates reset this fall and it doesn't sound like many borrowers are prepared. ARM reset volume for the coming months is clearly laid out in this chart from Credit Suisse. The subprime mortgage industry implosion may just be the tip of the iceberg.

If you are a homeowner, please at least take a look at what kind of mortgage you have today. If you have an ARM loan with a reset in the next few months you need to start planning now for that change. If you are considering refinancing, check your credit scores, estimate your new loan rates and evaluate the cost of that process.  If you are not going to refinance, calculate your monthly payment increase and create a plan for managing the extra costs.

Do you know what kind of mortgage you have? Do you have a plan for dealing with an ARM reset? Share your feedback in the comments section below.