A Wells Fargo-commissioned survey of American homeowners shows that the majority of homeowners do pay principal on interest-only real estate loans, despite rising concern over this type of debt.

Of the 8 percent of homeowners with interest-only real estate-secured accounts, a 73-percent majority pay both the principal and interest at least some of the time, according to the results of Wells Fargo’s Second Annual Survey of American Homeowners. Of the 73 percent, 23 percent pay the principal in addition to interest all of the time while an additional 8 percent make principal payments as well as interest payments outside of the standard payment schedule.

Just one in four, or 25 percent, pay only interest all of the time. These behaviors were consistent across both age and income, according to the survey.

The nationwide survey of more than 1,300 homeowners was conducted in August 2005 and released today by Wells Fargo. Respondents were questioned about their financial behaviors and attitudes regarding interest-only loans, the housing market and retirement planning.

Respondents’ primary reasons for choosing an interest-only payment features were to direct their funds into higher return investments and to lower their monthly payments, according to the survey. Surprisingly, choosing this type of account to be able to buy a more expensive home was not the most popular reason cited.

Other findings in the survey included:

–Thirty-eight percent of homeowners with a home equity account are more likely to have consolidated bills in the past year, compared to just 24 percent of homeowners without a home equity account.

–Seventy-four percent of respondents have started saving for retirement. Those with home equity accounts are ahead of the game with 78 percent of respondents saying they are saving for retirement compared with 70 percent who have never had a home equity loan or line of credit.

According to recent national studies by organizations in the housing industry, including the National Association of Realtors and Harvard University’s Joint Center for Housing Studies, single women account for the fastest growing segment of America’s home-buying population.

However, these survey findings show this group sees a darker cloud over the economy with 61 percent indicating they believe the economy is very weak compared to 42 percent of the general population who share this view.

Despite their potential to purchase homes, single women homeowners are much less likely to take advantage of the equity in their homes. In fact, just 35 percent (vs. 49 percent) have ever had a home equity loan/line of credit. Further, when questioned about retirement planning, only two of three single women (66 percent) indicated they have started to save for retirement compared to 74 percent of general homeowners. However, those single women homeowners with a home equity loan/line of credit are much more likely to be saving for retirement (82 percent vs. 61 percent) than their counterparts who have never had home equity loans or lines of credit.

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