Five Common Mistakes in the Home Buying Process.

With mortgage rates at their lowest level in some time, it's a great time to obtain a mortgage and buy that long-dreamed about home. But it's also a bad time to overlook certain things when you sign on the dotted line. Steer clear of the following pitfalls, and you should fare well

Mistake Number One: Not Doing Your Homework

Buying a home is the largest financial decision that most of us make in our lives. Sometimes it can seem like you are stepping into a different world with a strange language. Now is the time to bring yourself up to speed on the housing market, financial options and, the home buying process. The best advice here is don't try to do it alone. Part of your homework is finding a Realtor to act as a trusted advisor during this time. They will be able to assist you with many facets of the home buying process, make sense out of the documentation and, provide you with recommendations for other service providers you will need along the way.

Mistake Number Two: Not Getting the Right Loan for You

A loan is a product, and just as in life, one size doesn't always fit all. There are a large variety of mortgage loans available to qualified buyers. Review all your options before deciding what loan is right for you. If you intend to trade up to a bigger house in a few years, an adjustable mortgage may be the right one for you, but if you intend to stay in your home longer, you should probably opt for a fixed rate. You'll pay a higher rate, but you won't be subject to "payment shock" that sometimes comes with some adjustable-rate mortgages (ARMs).

Mistake Number Three: Not Getting a Lock-in Rate in Writing

A mortgage broker or mortgage company representative can tell you that a rate will be locked in, but such talk won't help you at closing if the rate has changed and you've do not have written verification of the previous arrangement. Have the lender you select provide a statement detailing the interest rate, the length of the rate lock and additional details of the loan before proceeding with your purchase.

Mistake Number Four: Thinking a Pre-qualification Means a Pre-approval

Laura E. Shifrin, a top broker at Townsend Center Realty in Townsend, Massachusetts, says some people pin their home-buying hopes on a mortgage pre-approval. "They think they go out and can afford a certain type of house and they can't," she explains.

"Unfortunately, they can't buy anything until their credit has been checked and the down payment ratios determined," Shifrin says. Pre-qualifying is just a quick credit check based on the information an individual provides. A pre-approval, on the other hand, means a mortgage professional has checked the employment history, verified funds, studied an individual's credit record and so forth. Getting pre-approved rather than pre-qualified saves a lot of heartache.

Mistake Number Five: Taking on Too Much Mortgage

There are numerous formulas promoted at various websites or by 'experts' that purport to tell you how much you can spend on a home. The bottom line is how much can you really afford? No formula substitutes for you sitting down and realistically determining your actual expenses related to home ownership. Utility expenses, maintainence and, improvements should all be considered. Many times people also find themselves' house poor' where they have the home they wanted but are unable to purchase furnishings or do anything else because all their available funds are going toward the house payment. A budget should also include funds set aside for contingencies such as a needed auto repair or other expenses. The water heater never seems to go out when you have the money available to fix it.