Survey Finds Younger Homeowners More Likely to Be Underwater

Younger Americans are more likely to have a home that is underwater, according to a survey from the ""FINRA Investor Education Foundation"":http://www.finrafoundation.org/ (FINRA Foundation).

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Based on survey findings, 25 percent of Americans between 18 and 34 years of age said they have an underwater mortgage. On the other hand, 18 percent of adults aged 35 to 54 said they were underwater, while only 8 percent of individuals 55 or over were underwater.

On a national level, the FINRA Foundation found 14 percent of adults said they were underwater on their mortgage.

For the national online survey, over 25,500 adults participated during a four-month period in 2012.

The survey also reported more than half of Americans would not be prepared to cover living expenses if a financial emergency, such as a job loss or sickness, were to occur. Fifty-six percent said they do not have rainy-day savings to cover three months, which also means they could easily fall behind on their mortgage if they are homeowners and an emergency situation transpired.

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According to the FINRA Foundation, younger Americans, or those who are 34 and under, are more likely to show signs of financial stress, including making late mortgage payments.

Individuals were also asked about their ability to save versus spend. The survey revealed 36 percent of Americans break even, while 41 percent spend less than their household income.

When study participants were asked five questions concerning financial literacy, the survey found 61 percent answered three or fewer questions correctly. The questions covered compound interest, inflation, principles relating to risk and diversification, the relationship between bond prices and interest rates, and the impact that a shorter term can have on total interest payments over the life of a mortgage.

""This survey reveals that many Americans continue to struggle to make ends meet, plan ahead and make sound financial decisions-and that financial literacy levels remain low, especially among our youngest workers. No matter how you slice and dice it, this rich, new dataset underscores the need for us to continue to explore innovative ways to build financial capability among consumers,"" said FINRA Foundation Chairman Richard Ketchum.

On a state-by-state basis, the survey results showed residents of California, Massachusetts, and New Jersey are the most financially capable, while residents of Mississippi were found to be in the least financially capable state. Arkansas and Kentucky also ranked towards the bottom based on the measurements used in the survey.