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Why Do Borrowers Make Mortgage Refinancing Mistakes
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Book Synopsis Why Do Borrowers Make Mortgage Refinancing Mistakes? by : Sumit Agarwal
Download or read book Why Do Borrowers Make Mortgage Refinancing Mistakes? written by Sumit Agarwal and published by . This book was released on 2015 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: Refinancing a mortgage is often one of the biggest and most important financial decisions that people make. Borrowers need to choose the interest rate differential at which to refinance and, when that differential is reached, they need to take the steps to refinance before rates change again. The optimal differential is where the interest saved by refinancing equals the sum of refinancing costs and the option value of refinancing. Using a unique panel data set, we find that approximately 59% of borrowers refinance sub-optimally - with 52% of the sample making errors of commission (choosing the wrong rate), 17% making errors of omission (waiting too long to refinance), and 10% making both errors. Financially sophisticated borrowers make smaller mistakes, refinancing at rates closer to the optimal rate and waiting less after mortgage rates reach the borrowers' trigger rates. Evidence suggests borrowers learn from their refinancing experiences as they make smaller mistakes on their second refinancing than on their first one.
Book Synopsis Why Do Borrowers Make Mortgage Refinancing Mistakes? by : Sumit Agarwal
Download or read book Why Do Borrowers Make Mortgage Refinancing Mistakes? written by Sumit Agarwal and published by . This book was released on 2013-11-04 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Consumer Mistakes in the Mortgage Market by : Yoon-Ho Alex Lee
Download or read book Consumer Mistakes in the Mortgage Market written by Yoon-Ho Alex Lee and published by . This book was released on 2013 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: Regulatory proposals for protecting consumers in the mortgage markets typically focus on making sure dangerous products are eliminated and consumers make informed product-choice decisions. These are intended to address consumers' product-choice mistakes. But there is another class of mistakes that has received relatively little attention in the current regulatory debate: consumers' failure to switch out of their mortgage products by refinancing in a timely manner. Studies have shown that once consumers choose mortgage products, they are slow to take advantage of reduced interest rates by refinancing efficiently. This is potentially worth several thousand dollars in interest cost savings. Safety or disclosure regulation can do very little to entice borrowers who are not constantly looking to maximize welfare. This Article makes three contributions: first, we rationalize failure-to-switch mistakes, using a neoclassical model of product search and market obfuscation; second, we explain why the market is unlikely to correct failure-to-switch mistakes on its own, based on the lessons we have learned about product-choice mistakes; third, we propose a simple solution that could potentially be effective in addressing sluggish refinancing. Our threshold suggestion is that the Consumer Financial Protection Bureau should establish, certify, and popularize a simple concept or methodology -- much like APR -- which conveys the net wealth and risk effects of refinancing to a given product. By creating a common language for consumers, lenders, and brokers, this approach can reduce consumers' information costs, teach them to demand information in a useful format, combat market obfuscation, and importantly, encourage several market-based solutions in turn.
Book Synopsis The Inefficiency of Refinancing: Why Prepayment Penalties Are Good for Risky Borrowers by :
Download or read book The Inefficiency of Refinancing: Why Prepayment Penalties Are Good for Risky Borrowers written by and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Introduction to Mortgages and Mortgage Backed Securities by : Richard K. Green
Download or read book Introduction to Mortgages and Mortgage Backed Securities written by Richard K. Green and published by Academic Press. This book was released on 2013-11-21 with total page 249 pages. Available in PDF, EPUB and Kindle. Book excerpt: In Introduction to Mortgages & Mortgage Backed Securities, author Richard Green combines current practices in real estate capital markets with financial theory so readers can make intelligent business decisions. After a behavioral economics chapter on the nature of real estate decisions, he explores mortgage products, processes, derivatives, and international practices. By focusing on debt, his book presents a different view of the mortgage market than is commonly available, and his primer on fixed-income tools and concepts ensures that readers understand the rich content he covers. Including commercial and residential real estate, this book explains how the markets work, why they collapsed in 2008, and what countries are doing to protect themselves from future bubbles. Green's expertise illuminates both the fundamentals of mortgage analysis and the international paradigms of products, models, and regulatory environments. Written for buyers of real estate, not mortgage lenders Balances theory with increasingly complex practices of commercial and residential mortgage lending Emphasizes international practices, changes caused by the 2008-11 financial crisis, and the behavioral aspects of mortgage decision making
Book Synopsis Stuck in Subprime? Examining the Barriers to Refinancing Mortgage Debt by : Lauren Lambie-Hanson
Download or read book Stuck in Subprime? Examining the Barriers to Refinancing Mortgage Debt written by Lauren Lambie-Hanson and published by . This book was released on 2019 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: Despite falling interest rates and major federal policy intervention, many borrowers who could financially gain from refinancing have not done so. We investigate the rates at which, relative to prime borrowers, subprime borrowers seek and take out refinance loans, conditional on not experiencing mortgage default. We find that starting in 2009, subprime borrowers are about half as likely as prime borrowers to refinance, although they still shop for mortgage credit, indicating their interest in refinancing. The disparity in refinancing is driven in part by the tightened credit environment post-financial crisis, along with the fact that many subprime borrowers are ineligible for the Home Affordable Refinance Program (HARP), which is the major policy initiative designed to assist borrowers in refinancing their mortgages. We argue that these barriers to refinancing for subprime borrowers have long-term implications for social stratification and wealth building. These concerns are exacerbated by an additional finding of our work that refinance rates have been significantly lower for black and Hispanic borrowers, even after controlling for borrower credit status.
Book Synopsis Behavioral Finance: Where Do Investors' Biases Come From? by : Itzhak Venezia
Download or read book Behavioral Finance: Where Do Investors' Biases Come From? written by Itzhak Venezia and published by World Scientific. This book was released on 2016-10-27 with total page 395 pages. Available in PDF, EPUB and Kindle. Book excerpt: This unique volume presents new original research exploring factors that lead to investors behavioral biases. It discusses how features such as professionalism, sophistication, gender, media, and culture influence investors' decision-making in general, and in particular, how they generate (or limit) behavioral and cognitive biases. The effects of these factors on capital markets are also discussed. The book is based on the discussions and presentations at the First Israel Behavioral Finance Conference, which took place in Tel Aviv in May 2015. It examines in greater detail some of the key issues discussed at the conference.This is an innovative book in behavioral finance: it is the first to present an extensive collection of papers which discuss a comprehensive array of factors that influence or define investor character and analyzes these factors' effects on financial markets. The book is useful for readers interested in understanding the factors that influence investors' profiles and thus their behavioral biases. The book will be of great interest to researchers and students seeking a reference book which contains timely research on these areas of behavioral finance.
Book Synopsis Law and Economics of Regulation by : Klaus Mathis
Download or read book Law and Economics of Regulation written by Klaus Mathis and published by Springer Nature. This book was released on 2021-04-24 with total page 327 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book explores current issues regarding the regulation of various economic sectors, theoretically and empirically, discussing both neoclassical and behavioural economics approaches to regulation. Regulation has become one of the main determinants of modern economies, and virtually every sector is subject to general laws and regulations as well as specific rules and standards. A traditional argument to justify regulatory interventions is the promotion of public interests. Fixing markets that lack competition, balancing information asymmetries, internalising externalities, mitigating systemic risks, and protecting consumers from irrational behaviour are frequently invoked to complement the invisible hand of the market with the visible hand of the state.However, regulations can lead to unintended consequences, and serve the interests of powerful private interest groups rather than the public interest and social welfare. In addition, new insights from behavioural economics question the traditional regulatory approaches, most prominently in attitudes towards consumers. Furthermore, digitalisation and technological innovation in general present new challenges in terms of both the type of regulation and the regulatory process.Part I of this book discusses various theoretical approaches to the economic analysis of regulations, while Part II looks at specific applications of the law and economics of regulation.
Book Synopsis Racial Differences in Mortgage Refinancing, Distress, and Housing Wealth Accumulation During COVID-19 by : Kristopher Gerardi
Download or read book Racial Differences in Mortgage Refinancing, Distress, and Housing Wealth Accumulation During COVID-19 written by Kristopher Gerardi and published by . This book was released on 2021 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The COVID-19 pandemic exacerbated racial disparities in U.S. mortgage markets. Black, Hispanic, and Asian borrowers were significantly more likely than white borrowers to miss payments due to financial distress, and significantly less likely to refinance to take advantage of the large decline in interest rates spurred by the Federal Reserve's large-scale mortgage-backed security (MBS) purchase program. The wide-scale forbearance program, introduced by the 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act, provided approximately equal payment relief to all distressed borrowers, as forbearance rates conditional on nonpayment status were roughly equal across racial/ethnic groups. However, Black and Hispanic borrowers were significantly less likely to exit forbearance and resume making payments relative to their Asian and white counterparts. Persistent differences in the ability to catch up on missed payments could worsen the already large disparity in home ownership rates across racial and ethnic groups. While the pandemic caused widespread distress in mortgage markets, strong house price appreciation in recent years, particularly in 2020, means that foreclosure risk is lower for past-due borrowers now as compared with the aftermath of the Global Financial Crisis and Great Recession. Furthermore, borrowers who have missed payments have significantly higher credit scores now than those who were distressed in the 2007-2010 period, largely due to the widespread availability of forbearance for federally backed mortgages.
Book Synopsis Household Finance by : Sumit Agarwal
Download or read book Household Finance written by Sumit Agarwal and published by Springer Nature. This book was released on 2020-10-07 with total page 352 pages. Available in PDF, EPUB and Kindle. Book excerpt: Household finance studies is a relatively recent field, exploring a growing understanding of how households make financial decisions relating to the functions of consumption, payment, risk management, borrowing and investing; how institutions provide goods and services to satisfy these financial functions of households; and how interventions by firms, governments and other parties affect the provision of financial services. This timely book analyses existing findings about household behavior as well as findings related to policy interventions. With international case studies, this book reviews a topic of global importance and brings a crucial up-to-date survey of the field for researchers and postgraduate students.
Book Synopsis Handbook of Financial Decision Making by : Gilles Hilary
Download or read book Handbook of Financial Decision Making written by Gilles Hilary and published by Edward Elgar Publishing. This book was released on 2023-08-14 with total page 463 pages. Available in PDF, EPUB and Kindle. Book excerpt: This accessible Handbook provides an essential entry point for those with an interest in the increasingly complex subject of financial decision making. It sheds light on new paradigms in society and the ways that new tools from private actors have affected financial decision making. Covering a broad range of key topics in the area, leading researchers summarize the state-of-the-art in their respective areas of expertise, delineating their projections for the future.
Book Synopsis The White Coat Investor by : James M. Dahle
Download or read book The White Coat Investor written by James M. Dahle and published by White Coat Investor LLC the. This book was released on 2014-01 with total page 160 pages. Available in PDF, EPUB and Kindle. Book excerpt: Written by a practicing emergency physician, The White Coat Investor is a high-yield manual that specifically deals with the financial issues facing medical students, residents, physicians, dentists, and similar high-income professionals. Doctors are highly-educated and extensively trained at making difficult diagnoses and performing life saving procedures. However, they receive little to no training in business, personal finance, investing, insurance, taxes, estate planning, and asset protection. This book fills in the gaps and will teach you to use your high income to escape from your student loans, provide for your family, build wealth, and stop getting ripped off by unscrupulous financial professionals. Straight talk and clear explanations allow the book to be easily digested by a novice to the subject matter yet the book also contains advanced concepts specific to physicians you won't find in other financial books. This book will teach you how to: Graduate from medical school with as little debt as possible Escape from student loans within two to five years of residency graduation Purchase the right types and amounts of insurance Decide when to buy a house and how much to spend on it Learn to invest in a sensible, low-cost and effective manner with or without the assistance of an advisor Avoid investments which are designed to be sold, not bought Select advisors who give great service and advice at a fair price Become a millionaire within five to ten years of residency graduation Use a "Backdoor Roth IRA" and "Stealth IRA" to boost your retirement funds and decrease your taxes Protect your hard-won assets from professional and personal lawsuits Avoid estate taxes, avoid probate, and ensure your children and your money go where you want when you die Minimize your tax burden, keeping more of your hard-earned money Decide between an employee job and an independent contractor job Choose between sole proprietorship, Limited Liability Company, S Corporation, and C Corporation Take a look at the first pages of the book by clicking on the Look Inside feature Praise For The White Coat Investor "Much of my financial planning practice is helping doctors to correct mistakes that reading this book would have avoided in the first place." - Allan S. Roth, MBA, CPA, CFP(R), Author of How a Second Grader Beats Wall Street "Jim Dahle has done a lot of thinking about the peculiar financial problems facing physicians, and you, lucky reader, are about to reap the bounty of both his experience and his research." - William J. Bernstein, MD, Author of The Investor's Manifesto and seven other investing books "This book should be in every career counselor's office and delivered with every medical degree." - Rick Van Ness, Author of Common Sense Investing "The White Coat Investor provides an expert consult for your finances. I now feel confident I can be a millionaire at 40 without feeling like a jerk." - Joe Jones, DO "Jim Dahle has done for physician financial illiteracy what penicillin did for neurosyphilis." - Dennis Bethel, MD "An excellent practical personal finance guide for physicians in training and in practice from a non biased source we can actually trust." - Greg E Wilde, M.D Scroll up, click the buy button, and get started today!
Book Synopsis The Routledge Handbook of Housing Policy and Planning by : Katrin B. Anacker
Download or read book The Routledge Handbook of Housing Policy and Planning written by Katrin B. Anacker and published by Routledge. This book was released on 2019-07-02 with total page 548 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Routledge Handbook of Housing Policy and Planning provides a comprehensive multidisciplinary overview of contemporary trends in housing studies, housing policies, planning for housing, and housing innovations in the United States, the United Kingdom, and Continental Europe. In 29 chapters, international scholars discuss aspects pertaining to the right to housing, inequality, homeownership, rental housing, social housing, senior housing, gentrification, cities and suburbs, and the future of housing policies. This book is essential reading for students, policy analysts, policymakers, practitioners, and activists, as well as others interested in housing policy and planning.
Book Synopsis Seduction by Contract by : Oren Bar-Gill
Download or read book Seduction by Contract written by Oren Bar-Gill and published by OUP Oxford. This book was released on 2012-08-23 with total page 296 pages. Available in PDF, EPUB and Kindle. Book excerpt: Consumers routinely enter into long-term contracts with providers of goods and services - from credit cards, mortgages, cell phones, insurance, TV, and internet services to household appliances, theatre and sports events, health clubs, magazine subscriptions, transportation, and more. Across these consumer markets certain design features of contracts are recurrent, and puzzling. Why do sellers design contracts to provide short-term benefits and impose long-term costs? Why are low introductory prices so common? Why are the contracts themselves so complex, with numerous fees and interest rates, tariffs and penalties? Seduction by Contract explains how consumer contracts emerge from the interaction between market forces and consumer psychology. Consumers are short-sighted and optimistic, so sellers compete to offer short-term benefits, while imposing long-term costs. Consumers are imperfectly rational, so sellers hide the true costs of products and services in complex contracts. Consumers are seduced by contracts that increase perceived benefits, without actually providing more benefits, and decrease perceived costs, without actually reducing the costs that consumers ultimately bear. Competition does not help this behavioural market failure. It may even exacerbate it. Sellers, operating in a competitive market, have no choice but to align contract design with the psychology of consumers. A high-road seller who offers what she knows to be the best contract will lose business to the low-road seller who offers what the consumer mistakenly believes to be the best contract. Put bluntly, competition forces sellers to exploit the biases and misperceptions of their customers. Seduction by Contract argues that better legal policy can help consumers and enhance market efficiency. Disclosure mandates provide a promising avenue for regulatory intervention. Simple, aggregate disclosures can help consumers make better choices. Comprehensive disclosures can facilitate the work of intermediaries, enabling them to better advise consumers. Effective disclosure would expose the seductive nature of consumer contracts and, as a result, reduce sellers' incentives to write inefficient contracts. Developing its explanation through a general framework and detailed case studies of three major consumer markets (credit cards, mortgages, and cell phones), Seduction by Contract is an accessible introduction to the law and economics of consumer contracts, and a powerful critique of current regulatory policy.
Book Synopsis The Cambridge Handbook of Consumer Psychology by : Cait Lamberton
Download or read book The Cambridge Handbook of Consumer Psychology written by Cait Lamberton and published by Cambridge University Press. This book was released on 2023-04-06 with total page 873 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the last two years, consumers have experienced massive changes in consumption – whether due to shifts in habits; the changing information landscape; challenges to their identity, or new economic experiences of scarcity or abundance. What can we expect from these experiences? How are the world's leading thinkers applying both foundational knowledge and novel insights as we seek to understand consumer psychology in a constantly changing landscape? And how can informed readers both contribute to and evaluate our knowledge? This handbook offers a critical overview of both fundamental topics in consumer psychology and those that are of prominence in the contemporary marketplace, beginning with an examination of individual psychology and broadening to topics related to wider cultural and marketplace systems. The Cambridge Handbook of Consumer Psychology, 2nd edition, will act as a valuable guide for teachers and graduate and undergraduate students in psychology, marketing, management, economics, sociology, and anthropology.
Book Synopsis The 106 Common Mistakes Homebuyers Make (and How to Avoid Them) by : Gary W. Eldred
Download or read book The 106 Common Mistakes Homebuyers Make (and How to Avoid Them) written by Gary W. Eldred and published by John Wiley & Sons. This book was released on 2002-01-18 with total page 321 pages. Available in PDF, EPUB and Kindle. Book excerpt: A guide for first-time home buyers describes what to look for in a real estate agent, how to choose the best mortgage, how to evaluate a neighborhood, and how to detect hidden costs.
Book Synopsis Who Pays for Your Rewards? Redistribution of the Credit Card Market by : Sumit Agarwal
Download or read book Who Pays for Your Rewards? Redistribution of the Credit Card Market written by Sumit Agarwal and published by International Monetary Fund. This book was released on 2023-03-10 with total page 73 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study credit card rewards as an ideal laboratory to quantify redistribution between consumers in retail financial markets. Comparing cards with and without rewards, we find that, regardless of income, sophisticated individuals profit from reward credit cards at the expense of naive consumers. To probe the underlying mechanisms, we exploit bank-initiated account limit increases at the card level and show that reward cards induce more spending, leaving naive consumers with higher unpaid balances. Naive consumers also follow a sub-optimal balance-matching heuristic when repaying their credit cards, incurring higher costs. Banks incentivize the use of reward cards by offering lower interest rates than on comparable cards without rewards. We estimate an aggregate annual redistribution of $15 billion from less to more educated, poorer to richer, and high to low minority areas, widening existing disparities.
