An Investigation of Adjustable-rate Mortgage Pricing Features

William K. Templeton, Butler University
Robert S. Main, Butler University
J. B. Orris, Butler University

Abstract

Investigates costs and risks associated with the choice of terms for adjustable rate mortgages. Impact of mortgage-rate changes on the size of payments for adjustable-rate mortgages; Examination of the choice of length of the fixed period before the occurrence of the first interest rate; Assessment of the choice of annual and lifetime caps for a standard one year adjustable rate mortgages.