Baeck, 2003(2) Mortage

Financial
Counseling and Planning

The Journal of the Association for Financial
Counseling and
Planning Education


Volume 14 (2), 2003

Determinants
of the Type of
Mortgage: Conventional or Federally Guaranteed Mortgage (FHA or VA)

Sunmee Baeck[1]
and Sharon A DeVaney[2]

The
purpose of this study was to examine the determinants of the type
of mortgage that households obtain: a conventional mortgage or a
federally
guaranteed mortgage, using the 1998 Survey of Consumer Finances. Based
on the
models of mortgage choice by Hendershott, LaFayette and Haurin (1997)
and
Gabriel and Rosenthal (1991), the study examined demographic, economic,
and
credit management factors. The results of logistic regression showed
that
households headed by individuals who were younger, less well educated,
non-white, with low income, a higher debt-to-assets ratio, and a higher
loan-to-value ratio were significantly more likely to obtain a
federally
guaranteed mortgage. Implications for consumer educators and financial
advisors
are presented.

Keywords:  Mortgage
loans


[1]Sunmee Baeck, Ph.D. Student,
Purdue University, Consumer Sciences & Retailing, 812 W. State
Street, West
Lafayette IN 47907-2060, phone 765-496-5004, fax 765- 494-0869, e-mail
sbaeck1@purdue.edu

[2]Sharon A. DeVaney, Ph.D., Professor, Purdue
University, Consumer Sciences & Retailing, 812
W. State Street, West Lafayette, IN 47907-2060, phone 765-494-8300, fax
765-494-0869, e-mail sdevaney@purdue.edu