The Mortgage Bankers Association (MBA) has released a study titled, "A Financial Analysis of Consumer Mortgage Decisions," conducted by Andrew J. Kalotay and Qi Fu, and sponsored by the Research Institute for Housing America (RIHA). This study provides financial planners, housing counselors and potential homeowners with a deeper look into some of the complex mortgage decisions consumers face and methods for analyzing mortgage choices. Using standard, well understood approaches and tools that financial professionals use to manage corporate and municipal budgets, the authors illustrate how these can be adapted for residential mortgages.
The main topics covered in the study include:
► The importance of a homeowner's planned ownership horizon in determining the appropriate mortgage product and rate/point tradeoff.
► How to determine the right time to refinance by balancing the gains from lowering payments today against the loss of option value from refinancing too early.
► The costs and benefits of paying down a mortgage versus other potential investment choices.
A copy of the study can be found on the RIHA Web site by clicking here.