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Mortgage Selection Using a Decision Tree Approach

Author

Listed:
  • Robert E. Luna

    (Sandia National Laboratory, Albuquerque, New Mexico 87185)

  • Richard A. Reid

    (Anderson Schools of Management, University of New Mexico, Albuquerque, New Mexico 87131)

Abstract

People choose mortgage types to minimize their costs, basing their decisions largely on expected future interest rates. An analysis of past changes in interest rates shows surprising regularity. This result provided confidence that the potential benefits associated with a more structured approach could be realized. Using concepts from classical decision theory and a reasonable range of alternative future scenarios, a rational choice for financing a personal investment was identified.

Suggested Citation

  • Robert E. Luna & Richard A. Reid, 1986. "Mortgage Selection Using a Decision Tree Approach," Interfaces, INFORMS, vol. 16(3), pages 73-81, June.
    • Handle: RePEc:inm:orinte:v:16:y:1986:i:3:p:73-81
    DOI: 10.1287/inte.16.3.73
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    Cited by:

    1. Zanakis, Stelios H. & Mandakovic, Tomislav & Gupta, Sushil K. & Sahay, Sundeep & Hong, Sungwan, 1995. "A review of program evaluation and fund allocation methods within the service and government sectors," Socio-Economic Planning Sciences, Elsevier, vol. 29(1), pages 59-79, March.

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