The housing crash brought with it many changes including government programs to aid homeowners facing foreclosures, a closer look at lending practices, and new loan products for consumers.

The last item is what concerns many Americans who are interested in taking advantage of falling housing prices. A study called, A Financial Analysis of Consumer Mortgage Decisions written by Andrew J. Kalotay and Qi Fu and released by the Research Housing Institute for America (RIHA) and the Mortgage Bankers Association (MBA) details information on getting a mortgage loan.

Getting as much information and education about the best options before taking a mortgage loan has never been more vital—it can help ensure that your borrowing strategy is successful.

Fu says their study focuses on three main areas in the mortgage industry. The first chapter is about how to select a mortgage based on the points menu. "The first question to ask is how to make a decision when given the choice between paying points and paying a higher rate," says Fu.

He says that often borrowers who simply look at the Annual Percentage Rate (APR) don’t consider all the necessary facts to make the best choice. "The APR includes some information but it doesn’t account for the possibility that the mortgagor may refinance down the road," says Fu. The study gives the mortgagor a deeper look at this consideration. In chapter two, another key concern is addressed. The study helps mortgagors answer the question of when to refinance.

"Oftentimes when mortgagors make a decision they only consider the savings they get from refinancing but what they don’t consider is the opportunity-cost that they’re giving up of possibly refinancing at a lower rate down the road," says Fu. The study, using graphs, charts and case studies, aims to help mortgagors understand "refinancing efficiency" and a formula that helps them decide the optimal time to refinance.

Fu says homeowners can save lots of money by first making sure that the timing is best for a refinance. He recommends using their refinance calculator which can be found online at kalotay.com/calculators In chapter three, the study covers, "When you have a lump sum [of money] and you have a choice between investing in something else or paying down your mortgage—how to best consider that decision," says Fu.

The 60-page study available online at the Mortgage Bankers Association offers borrowers a glimpse of how to handle this situation, suggesting possible, but limited, alternative investment options. Visit mbaa.org. For investing in alternative assets, greater research would be helpful; however, overall, this report provides good information for borrowers to consider before taking out a mortgage loan. It provides clear definitions and methods to analyze complex mortgage products for borrowers to review in order to be better equipped to make important financial decisions about future mortgage loans.

Published: August 28, 2009

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Phoebe Chongchua is an award-winning journalist, an author, customer service trainer/speaker, and founder of Setting the Service Standard, a customer service training and consulting program offered by Live Fit Enterprises (LFE) based in San Diego, California. She is the publisher of Live Fit Magazine, an online publication that features information on real estate/finance, physical fitness, travel, and philanthropy. Her company, LFE, specializes in media services including marketing, PR, writing, commercials, corporate videos, customer service training, and keynotes & seminars. Visit her magazine website: www.LiveFitMagazine.com. Phoebe's articles, feature stories, and columns appear in various publications including The Coast News, Del Mar Village Voice, Rancho Santa Fe Review, and Today's Local News in San Diego, as well as numerous Internet sites. She holds a California real estate license. Phoebe worked for KGTV/10News in San Diego as a Newscaster, Reporter and Community Affairs Specialist for more than a decade. Phoebe's writing is also featured in Donald Trump's book: The Best Real Estate Advice I Ever Received and The Complete Idiot’s Guide to Buying Foreclosures. She is the author of If the Trash Stinks, TAKE IT OUT! 14 Worriless Principles for Your Success. Contact Phoebe at (858) 259-3646 or . Visit PhoebeChongchua.com for more information.