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| A Note on the Valuation of Mortgage Loan
Commitments: Incorporating the Commitment Cost in the Mortgage Rate Author: George W. Kutner and James A. Seifert Start Page: 281 Abstract: Kutner and Seifert
recently found that mortgage loan commitments have significant financial value. This note
presents a procedure that may be used to incorporate this value in the nominal lending
rate. The findings indicate that typical lending rates should be augmented by
approximately 8 to 44 basis points in order to adequately capture this additional cost. |
