An Empirical Analysis of Residential Mortgage Refinancing Decision-Making

Swati Virmani and Austin Murphy

Journal of Housing Research, 2010, vol. 19, issue 2, 129-138

Abstract: This research empirically investigates the relative optimality of several different methods of making refinancing decisions on residential mortgages. The results indicate that a simple rule of refinancing whenever the mortgage rate has dropped 1% was approximately as effective as application of an option pricing model in minimizing the cost of financing over the 1980–2007 interval.

Date: 2010
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DOI: 10.1080/10835547.2010.12092021

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