Mortgage Financing and the Personal Portfolio

Open Access
Begley, William Francis
Area of Honors:
Bachelor of Science
Document Type:
Thesis Supervisors:
  • Louis Gattis Jr., Thesis Supervisor
  • James Alan Miles, Honors Advisor
  • Portfolio Optimization
  • Mortgage
  • Housing
This thesis provides an in-depth study of portfolio optimization and the associated effects of a mortgage on one’s portfolio allocations by incorporating the investment and financing structure of one’s home. The average American has over half of their overall wealth in their home. When optimizing a personal portfolio for various levels of risk and return, it is necessary to include a mortgage into the portfolio by viewing the mortgage as a short position on the bond market. By incorporating a mortgage into an individual’s allocation to stocks and bonds, one can accurately allocate their resources to account for all financial positions.