**This page highlights real estate posts on there topics.**

**First topic is the choice between 15-year FRMs and 15-year FRMs. I find 15-year FRMs superior for those who can afford the payment.**

**The second topic looks at the mathematics of mortgage qualification for households that have a lot of student debt. In particular, I ask if and when the household should convert to a 20-year mortgage in order to purchase a home.**

**The third topic looks at costs and benefits associated with ARMs. I find that ARMs that adjust after one year are extremely risky. However, ARMS that adjust after 5 or more year deserve consideration.**

I hope these posts are useful to you!

__Choice Between 15-year FRM and 30-year FRMs:__
Post compares outcomes from use of 30-year FRM to a 15-year
FRM. This post presents actual formulas
for mortgage calculations. (Most of my
posts use pre-programmed Excel formulas.)
The 15-year FRM strategy involves a higher down payment equalizing
monthly payments across the two scenarios.

Post examines a situation where the 30-year FRM is 1.0
percentage point higher than the 15-year FRM but the homeowner has a high
marginal tax rate. The IRR is much
better on the 15-year FRM despite the homeowner’s high marginal tax rate.

**:**

__Mortgage Qualification Issues__
Post creates a calculate that shows how much income a person
must have to purchase a $300,000 home with a 90% LTV mortgage. Two households have $50,000 in student debt
and non-trivial other consumer loans.
Post shows gain from extending student debt to a 20-year term is small
compared to additional cost.

Post creates a calculator that shows how much house a person
can qualify for given her income. Two
households in this example have $100,000 in student debt but no other consumer
loans. A household that converts a
10-year student loan to a 20-year student loan can qualify for a much larger
mortgage. But the cost in terms of
additional payments on student loans is large.

**:**

__Adjustable Rate Mortgages__
This post was written when the rate 1-1 ARMs (ARMs that
adjust after the first year) were at historic lows. Post shows that after one year payments
would be lower on a 5-1 or 7-1 ARM.
Despite low initial interest rates, a longer term ARM is much less
costly than the 1-1 ARM in virtually all circumstances.

Post looks at statistics comparing both interest rates and monthly
payments on 30-year FRM and 5-1 ARMs.
Currently, all interest rates are low.
However, the 5-1 ARM remains a relatively bargain because the FRM-ARM
payment differential is near the 75

^{th}percentile.