The Mortgage as a Personal Investment Choice: A Pedagogical Case

This case requires students to address both mortgage choice and financial planning. The mortgage choice decision is not made in a void, but is instead made within a portfolio context. Individuals and families with a portfolio of assets and different investment horizons will likely make different fin...

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Bibliographic Details
Published in:Journal of real estate practice and education 2010, Vol.13 (2), p.177-184
Main Authors: Albert, Joseph D., Marshall, S. Brooks, Hamilton, Arthur J., Hobson, Hugh
Format: Article
Language:English
Subjects:
Case Study
Decision making
Financial investments
Financial planning
Investment return rates
Investment risk
Loan payments
Long term investments
Mortgage loans
Mortgage rates
Private mortgage insurance
Real estate
Retirement plans
Skis
Yield
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Summary:This case requires students to address both mortgage choice and financial planning. The mortgage choice decision is not made in a void, but is instead made within a portfolio context. Individuals and families with a portfolio of assets and different investment horizons will likely make different financing choices. In the most obvious case, having the ability to pay cash for a property may generate a purchase discount, but that ability would not preclude the use of debt when debt enhances ones overall portfolio. The Milner family is moving from Charlotte, North Carolina to Atlanta, Georgia to take advantage of a career opportunity. They are in the process of purchasing a house in Atlanta and need to determine the optimal financing option. They have the ability to assess mortgage costs including charges for private mortgage insurance. The question is what mortgage choice would be most appropriate given their goals.
ISSN:1521-4842
1930-8914