Title: When to refinance a mortgage: A dynamic programming approach [An article from: European Journal of Operational Research]
Author: P.T. Lee, D.B. Rosenfield
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This digital document is a journal article from European Journal of Operational Research, published by Elsevier in . The article is delivered in HTML format and is available in your Amazon.com Media Library immediately after purchase. You can view it with any web browser.

Description:
When should one refinance a mortgage loan? It is one of the most common finance questions in today's world. There have been surprisingly few attempts to answer this question in a structured manner, however. Moreover, the existing guidelines for refinancing consist of a short list of very simple rules that have a limited application. This article addresses the question through a dynamic programming model coupled with an analysis of historical interest rates. The analysis reveals a more complex set of rules for an optional refinance decision--oftentimes conflicting with the conventionally accepted idea that rate differences must be greater than two percent.