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A simulation approach to the choice between fixed and adjustable rate mortgages
| Content Provider | Semantic Scholar |
|---|---|
| Author | Templeton, William K. Orris, J. Burdeane |
| Copyright Year | 1996 |
| Abstract | Mortgage borrowers appear to have a difficult time evaluating the costs and risks associated with the choice between a fixed rate mortgage and an adjustable rate mortgage (ARM). This study uses a simulation approach to model the choice. We represent the risk of the ARM with distributions of present value cost differentials for a variety of mortgage life periods. We provide insight on the financial planning aspect by modeling the impact of mortgage rate changes on the size of payments for ARMs. Simulation can yield non-intuitive results that may lead to better decision making by borrowers. |
| Starting Page | 101 |
| Ending Page | 117 |
| Page Count | 17 |
| File Format | PDF HTM / HTML |
| DOI | 10.1016/S1057-0810(96)90004-9 |
| Alternate Webpage(s) | https://digitalcommons.butler.edu/cgi/viewcontent.cgi?article=1007&context=cob_papers&httpsredir=1&referer= |
| Alternate Webpage(s) | https://digitalcommons.butler.edu/cgi/viewcontent.cgi?article=1007&context=cob_papers |
| Alternate Webpage(s) | http://www2.stetson.edu/fsr/abstracts/vol_5_num2_p101.pdf |
| Alternate Webpage(s) | https://doi.org/10.1016/S1057-0810%2896%2990004-9 |
| Volume Number | 5 |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
