The first thing to consider is obviously your financial situation. You will have loan fees, appraisal and credit report costs, closing costs, insurance, moving expenses and property taxes to consider. Do you have enough income to pay your projected mortgage payments? As a rule of thumb, no more than 28 percent of your gross monthly income should be dedicated to housing payments.

You also need to take a realistic look at your debt load. Credit card and car payments, utility bills, insurance and child support/tuition, etc. are certainly factors to consider. And remember that you won't be able to call the landlord to fix that leaky faucet (or roof), so you need to have a cash reserve set aside for unexpected emergencies such as broken water heaters or furnaces...

How's your credit history? Past delinquent payments stay on your records for a long time and will seriously affect your ability to procure a mortgage loan. Student loan arrears, debts in collection and past bankruptcies are a major obstacle, but worst of all, if you owned a home in the past and you established a record of late mortgage payments, you will be unlikely to get a loan. Other financing alternatives exist, and an experienced Realtor can be your best guide if you are determined to buy a house. Get a credit report on yourself, and clear up any discrepancies before you apply for that loan!

How long do you think you'll want to remain in your new home? Most Americans move within seven years, so if you are the norm, you might want to consider an adjustable rate mortgage (ARM). This will allow you to qualify at a lower rate, and will give you lower monthly payments for the first few years. In fact, you will actually pay less interest on an ARM than a 30 year fixed rate mortgage if you sell or refinance after 5 or 6 years. An ARM will also enable you to afford "more house" than you would otherwise qualify for with your income.

When you begin your search, you will be faced with a wide array of choices and alternatives. Be realistic in your expectations - that great 4 bedroom, 2 bath home on acreage with river frontage under $100,000 just doesn't exist except in a buyer's imagination! In any case, remember that a larger home means larger mortgage payments, higher utility costs, and of course, higher real estate taxes!

Look closely at the neighborhood, and pay special attention to the home's floor plan, appliances and decorating. Will you be able to afford replacing floor coverings or kitchen and bathroom fixtures and appliances? What about the furnace, hot water heater, washer and dryer? These major purchases can really throw you for a loop if you're not prepared for them. Consider asking for a home owner warranty from the seller. This is basically an insurance policy covering major appliances and fixtures during your first year of occupancy.

Ask for detailed inspection reports on your prospective purchase. Lenders generally require termite and dry rot inspection reports, and will require that needed repairs be accomplished prior to lending money on the house. They also sometimes ask for roof reports indicating at least 3-5 years of remaining roof life. For country property, well flow and water quality reports, and checks of the septic system are prudent if not always required. The state requires water purity tests on sales of property with wells. You can opt for a "whole house inspection," which will give you the best overall assessment of the condition of the house, and the greatest peace of mind. However, you will generally be expected to pay for inspections beyond those required by your lender.

You will have many things to consider in buying a new home, and an experienced Realtor is your best guide in helping you determine whether or not you really are ready to buy a home, and determine how much house you can afford. Now is undoubtedly a great time to buy, and the affordability index is good, but purchasing a home remains in all likelihood the biggest single investment you'll ever make. So be informed, be prepared, save your money and get ready!