Mortgage Choice in Rural Housing

Abstract

Rural homeownership is promoted in the United States by mortgage insurance programs administered by the federal government. We analyze the choice between assistance offered by two such agencies: the Federal Housing Administration and the Rural Housing Service. We find applicants are sensitive to the relative annual mortgage insurance premiums and guarantee fees. However, there are also persistent racial differences as well as institutional effects. We also find the application and origination process is substantially longer in the RHS program, but variation in closing times does not clearly impact mortgage choice.

Keywords: mortgage, housing, insurance, rural, Federal Housing Administration, Rural Housing Service

JEL Classification: R3, R38, R51, Q15, G1, G18, G2, G21, G22, G28