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After the Great Recession: Financial Sophistication and Housing Leverage among Middle-aged Households
Keywords: 5 words maximum
Great Recession; financial sophistication; mortgage; housing leverage; Survey of Consumer Finances (SCF)
Very short description for use in the program to help attendees understand more than a title can describe
U.S. households face various choices in saving for retirement, with one of the most common decisions related to maintaining or paying off a mortgage. Using the 2010 and 2013 Survey of Consumer Finances datasets, this study investigates the relationship among middle age households between financial sophistication and having an outstanding mortgage balance and the relationship between financial sophistication and loan-to-value (LTV) ratios. Results from Heckman selection model indicate that financial sophistication was positively associated with higher LTV ratios as well as an outstanding mortgage balance, implying that financially sophisticated households may be actively using leverage to increase asset returns.
Lead & Corresponding Author
Kyoung Tae Kim, PhD, The University of Alabama
Job Title
Assistant Professor
Additional Authors
Martin Seay, Ph.D., Kansas State University
Job Title
Assistant Professor
Hyrum Smith, Virginia Tech
Job Title
Assistant Professor