Three things you need to know about mortgage loans

So, you want to buy a house. Unless you’re paying cash, you’ll need to secure a mortgage loan. Prepare for the lending process before you dive head first into the market with these three tips.

Don’t wait until you find a home to explore your loan choices

Financing isn’t exciting. It’s a means to an end. Looking for your dream house … now that’s exciting.

Unfortunately, waiting until you find your dream home to consider your loan options makes the process more stressful and could torpedo your home purchase.

Get the approval process started while you’re looking at homes. Once you find the one you want, you’ll be busy with negotiations, inspections, repairs, deadlines, movers—keeping on top of the loan process will get a lot more difficult.

Know how much you have for a down payment

If you can put down 20% of the purchase price of a home, you’ll likely get a better interest rate and avoid private mortgage insurance. However, that could severely restrict the homes you can afford to buy. If you put down less than 20%, you may need to pay for mortgage insurance, but you could get the property you really want.

There are options for buyers who use less than a 20% down payment, such as Federal Housing Administration, Veterans Affairs loans and U.S. Department of Agriculture loans. Talk to your lender to see what approach is best for your situation.

Look for local down-payment assistance programs

The federal government isn’t the only entity that helps buyers. States, counties and cities offer assistance for certain buyers who need help with down payments. These programs can be a boon if you’re struggling with the initial costs of homeownership; however, make sure you understand the terms and conditions to get the most out of the assistance.

Your lender is likely aware of available programs in your community, and you can also contact the U.S. Department of Housing and Urban Development to learn about such assistance in your area.

Getting a mortgage loan can be complicated, but with some preparation and a lender on your side, you can get the property you want.