The government has a lot of programs to aid homeowners facing foreclosures, however, is this really enough to help them arrive at a decision of getting a better 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.

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. This 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.

Fu says their study focuses on three main areas in the mortgage industry:

1. First chapter

* The first question to ask: “How to make a decision when given the choice between paying points and paying a higher rate?”

According to Fu, borrowers who simply look at the Annual Percentage Rate (APR) don’t think about and look at all the necessary facts to make the best choice. This APR features little information, however, it doesn’t account for the possibility that the mortgagor may refinance down the road. The study gives the mortgagor a deeper look at this consideration.

2. Second chapter

* Answer the question: “When to refinance?”

Fu noted that when mortgagors decide, they do not take into consideration the opportunity-cost that they may be giving up due to refinancing at lower rates. They would only take memo of the savings they would get. He also added that timing is the key for a refinance, which can actually be computed using their refinance calculator at kalotay.com/calculators.

3. Third chapter

* “When you have a lump sum of cash and you have a choice between investing in something else or paying down your mortgage—how to best consider that decision?”

For investing in alternative assets, greater research would be helpful. We are hoping, along with Andrew J. Kalotay and Qi Fu, that these tips could actually help you in getting the best mortgage loan.