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The home-buying process is complicated and intimidating, especially if it’s your first time. And for most people, buying a home means getting a mortgage, a complex process with many steps and places where you can go wrong.

Few of us learn how mortgages work before it comes time to apply for one, so it’s difficult to tell fact from fiction when it comes time to get a mortgage yourself. But it’s crucial to understand the details of this vital part of your financial life because your mortgage has wide-ranging impacts on the rest of your finances.

So, what are the critical things to know when you’re taking out a mortgage? And what are some of the misconceptions around this common loan? With a few basic facts, you can gain the understanding you need to make the best possible decisions for yourself and your family.

What Is a Mortgage?

A mortgage is a type of loan that is used to buy a piece of real estate, typically a home, which is lenders then use as collateral against the loan. That means the house itself is used as a type of insurance in case the borrower defaults on the loan. The lender can take the home to make itself whole if a borrower misses payments on the loan for too long.

Get Pre-Qualified

There is a lot of old-fashioned advice out there that suggests you should find a home you want to buy and then apply for a mortgage. But in today’s home-buying market, you should actually do the opposite. Buying a home is a competitive prospect in most major metro areas in the U.S., and showing a seller that you have your financing lined up and ready to go could make the difference between a winning bid and a losing one. Plus, you’ll be able to move more quickly and make an offer on a home you like, and you can house-hunt more realistically if you know how much you’ll be able to borrow.

Consider Your Finances First

Interest rates fluctuate and many variables impact them, including the political climate and the economy’s overall health. Low-interest rates allow your money to go further and allow you to spend more money on a house because you can apply funds towards the principal balance you’d otherwise use for interest. But you shouldn’t plunge into buying a home just because interest rates are low. Consider your own finances, needs, and goals first. If you buy when everyone else is because rates are low, you could end up paying more overall because of increased competition in the market.

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Know the Facts About Down Payments

Other outdated advice for homebuyers says that you’re required to pay 20% of the home’s total cost as a down payment when you make the purchase. But that’s simply not true, especially for first-time homebuyers who typically don’t have tens of thousands of dollars in savings. There are many programs available that allow you to put down less money. For example, The Federal Housing Administration can provide you with a mortgage with only 3.5% down if your credit is good enough. Speak to a lender you trust to help you understand exactly what the requirements will be and what you qualify for.

Choose the Right Loan For You

While it’s true that most borrowers choose a 30-year mortgage, that doesn’t necessarily mean that it’s the right choice for you. You can choose a shorter term if you’re comfortable with higher payments, allowing you to pay off your home in 15 or even 10 years. These loans usually come with lower interest rates as well, allowing you to put more money toward the loan’s principal. Again, consider your finances and your individual goals, plus your level of comfort with loans and payments, before deciding on your loan.

Mortgages can be a sticky subject with lots of pieces to understand, but they don’t have to be intimidating or impossible. With a bit of education and some research, you can get a loan that works for you and helps you meet your goals of homeownership.