TY  - JOUR
AU  - Hendershott,Patric H.
AU  - LaFayette,William C.
TI  - Debt Usage and Mortgage Choice: Sensitivity to Default Insurance Costs
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5069
PY  - 1995
Y2  - March 1995
UR  - http://www.nber.org/papers/w5069
L1  - http://www.nber.org/papers/w5069.pdf
N1  - Author contact info:
Patric H. Hendershott
Fisher Hall
Ohio State University
2100 Neil Avenue
Columbus, OH 43210
Tel: 218/963-1393
Fax: 218/963-9484
E-Mail: hendershott.2@osu.edu
AB  - Purchase of a house requires three interrelated household financial decisions: what level of debt to obtain, whether to select an adjustable or fixed rate mortgage (ARM or FRM) and whether to choose an FHA or a conventional loan.  While some have analyzed the mortgage debt decision and the ARM/FRM choice, virtually no one has studied the FHA/conventional mortgage choice or the interrelation among the mortgage debt and instrument decisions.  In our sample of 819 young home purchasers, debt and mortgage choice is driven by a need to finesse the downpayment and payment constraint ratios and to lower mortgage insurance costs.
ER  -