More than half of Americans don’t know understand mortgages

Do you know what a mortage is, really?

More than half of Americans — including some homeowners — don’t know the true definition of the common real estate loan, according to a new survey.

Conducted by OnePoll on behalf of PrimeLending, 2,000 Americans were asked from a list of options what the definition of a mortgage is, as part of a broader knowledge test of the housing market.

Only 49% of people chose the correct definition of the word “mortgage” from a list of options — 54% of them being homeowners and 40% of those who rent.

Of homeowners surveyed, 42% actually had a mortgage on their homes, while just under half (48%) used cash to purchase. Meanwhile, only a small fraction inherited their home from a family member (7%).

However, most participants thought they chose the correct definition of “mortgage,” with 80% of those who contributed to the poll thinking they passed the test. In fact, 55% said they thought they were “very informed” on the housing market.

Beyond the definition of mortgage, poll-takers seemed hazy on details about the process of buying a home in general, with 18% of people saying they had no idea how much a down payment on a house should be. On top of that, 41% claimed you do not have to pay the bank back on your mortgage if they go out of business, which isn’t true.

Regardless of being informed or not, 45% of people surveyed said they were looking to purchase a house in the next three to five years.

That’s where having an expert in mortgage lending comes in handy.

“When it comes to getting the best mortgage, choosing an experienced, knowledgeable lender is critical,” Tim Elkins, chief production officer of PrimeLending, said. “Your mortgage lender should be able to run several scenarios and help you evaluate all your options.”