The problems being experienced in the mortgage market are something that can no longer be ignored and could end up causing many more problems than originally expected.

What is most troubling about all of the foreclosures and delinquencies we are seeing is the fact that many of them could be avoided if homeowners would just educate themselves on their mortgage.

Even though buying a home and subsequent mortgage is one of the biggest financial decisions a person will make in their lifetime, many people do not take the time to understand their mortgage before they take one out.

This ignorance is fueling much of the problems within the industry.

A recent article by Elizabeth Razzi of Bankrate.com, “Mortgage ignorance rampant,” discusses how such a large majority of homeowners have no clue about the mortgage they are currently in.

This is especially dangerous for those with adjustable-rate mortgages (ARMs) that have a payment increase because the homeowner is unaware that their payment could increase significantly, and when it does they will not have the funds to pay it; resulting in a mortgage late or even worse – a foreclosure.

The article looks at a recent survey that was conducted that shows just how ignorant people are about the major loans they are in; which is bad news for every party involved. “In the survey 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.”

Obviously there are is an abundance of different types of mortgage products available on the market, but this does not mean that homeowners should jut zone everything out and not look into their specific mortgage product and understand the fine print.

This ignorance is exactly why there are so many foreclosures and delinquencies occurring. People did not understand what they were getting into, and were then unable to pay it back.

According to the survey, the majority of homeowners who did know what type of mortgage they had, and knew that they were in an ARM knew that they should refinance before their rate increased. A total of 36 percent of those who knew they had an ARM would refinance.

If more homeowners knew this, than we wouldn’t be seeing as many defaults and foreclosures.

“A total of 57 percent of homeowners with mortgages said they have fixed-rate mortgages, 9 percent have some variety of an adjustable-rate mortgage. Homeowners in the poll who knew they had an adjustable-rate mortgage (ARM) were asked what they planned to do when the interest rate adjusts, 34 percent said they didn't know what they'd do.”