Date of Award
Moore School of Business
Ryan J. Gay
This thesis project creates a hypothetical situation in which individuals choose either a thirty-year or fifteen-year fixed-rate mortgage on the same house at the same time and uses historical data to simulate the stock portfolios resulting from investment strategies based on this choice. Both strategies have the same time horizon and total monthly payment, so investors should be indifferent between the two. Using the fifteen-year strategy, the investor pays a higher mortgage payment every month for fifteen years then invests the entire amount of the payment in the stock market monthly for the next fifteen years. Using the thirty-year strategy, the investor pays a lower mortgage payment for thirty years and invests the savings monthly throughout the mortgage’s life. This project compares the simulated final values of portfolios beginning every month starting in 1971 to determine if historical data supports the use of one strategy over the other. The purpose of this thesis is to provide future homebuyers with knowledge about two possible investment strategies and to assist them in choosing one that will be beneficial in the long run.
Wylie, Grace Marie, "The Effect of Mortgage Timeline on the Investor's Portfolio" (2016). Senior Theses. 67.