The Mortgage Bankers Association has released a study that's intended to serve as an overview for choosing between different types of mortgages and determining when to refinance.The 58-page study, "A Financial Analysis of Consumer Mortgage Decisions," also analyzes the pros and cons of using surplus cash to pay down a mortgage or investing in Treasurys or municipal bonds.The study makes a case that borrowers who expect to move within five years consider a 5/1 or 7/1 hybrid adjustable-rate mortgage (ARM) loan. For borrowers considering only long-term fixed-rate mortgages, the study compares 15-year and 30-year loans. Variables such as points and so-called "no-cost" loans are also explored.Authors Andrew J. Kalotay and Qi Fu note that "sophisticated borrowers" may choose to negotiate a mix-and-match of mortgage types in a single contract -- borrowing part of the contract principal as an ARM and another part as a fixed-rate loan, for example.When it comes to ...
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