Consider negotiating for a lower down payment without private mortgage insurance.

Owning a home is a big part of the American dream, but working hard and saving money is only one part of making this dream come true. Knowing the ins and outs of all the different home loans and mortgages out there is equally important, and making informed decisions on how you borrow can help ensure that the dream doesn't become a nightmare.

Realtor Jeanette Henderson is the chair of the California Association of Realtors' Housing Affordability committee and has received special recognition as an outstanding committee chairman. Here she offers advice for maximizing the benefits of a home mortgage:

• Value and money.
  According to Henderson, home buying is all about leveraging, which means commanding the highest value with the smallest amount of money.

• Protect credit rating.
  The first thing you want to do is reduce the balances on your existing credit cards. You shouldn't cancel them, however, because suddenly closing long-standing accounts can actually lower your credit score. When they're in good standing with zero balances, this reflects better on your credit history.

• Avoid large down payments.
  It's not always wise to deplete your reserves by making a large down payment. First try to negotiate getting rid of private mortgage insurance with less than 20 percent down.

• Avoid prepayment penalties.
  Never accept a prepayment penalty. You want to be free to refinance or sell your property at any time without paying a bonus to the lender.

• Buy at top of comfort zone.
  Lastly, make sure that you buy as big a house as you can within your budgetary comfort zone, because you want to be able to grow and expand without having to buy another property or sell in a less forgiving market.