The very first thing you should do before you buy a house is go to a trusted lender - maybe your local bank or credit union - and get pre-approved for a mortgage. This will accomplish a number of things for you:

You will establish what your spending level is. This can help immensely in the house-hunting process.

You will be able to get a copy of your credit rating. Your lender will request this in order to pre-approve you. Be sure to get a copy of that credit file from them. You can use it for later when you will want to get other quotes. Note that you don't necessarily have to get other quotes now. Just be sure that you know how much you can potentially qualify for with at least one lender. Then you can start looking at houses while you continue to check out your best deal in a mortgage.

Your pre-approval will give you an idea of the monthly payments that will be associated with your future mortgage. This is vital information.

Your pre-approval may also include a 'locked in' interest rate. In times when rates are going up, getting an interest rate locked in can be very helpful and may save you a lot of money later.

Once you have been pre-approved consider what your monthly payments will be. Take a look at your spending patterns as well. Although you may have been approved for a mortgage of $150,000 you may find that you really don't want one that big because you don't want your payments that high. The time to think about this is BEFORE you buy. While a lender may consider you capable of handling a certain level of debt, you may want more "wiggle room" for emergencies. Take this into account and consider houses at a lower price point if you want to keep your mortgage lower.

Then, start the house hunting! As a buyer, you can get a real estate agent who can help you. In fact, you might want to work with more than one agent while you are initially house hunting. It costs you nothing as a buyer because the seller of the property pays for the real estate agent's services.

Almost every weekend the newspaper will list 'open houses', which will allow you to tour a property. It's worthwhile to attend a few of these in order to see how price in the housing market matches up to what you get. You can also go to new housing developments and see what a builder would offer you for the same price.

The more information you have about the housing market, the options and prices of homes, as well as your own purchasing power, the better you will be able to shop for your home.

You've done it; you've finally found the home that fits your budget as well as your personal and family needs. It's the right neighbourhood; it's a reasonable commute to work. You even like the color of the paint in the living room. You are all set.

You might want to think again.

First of all, there are moving costs. Even if you are a do-it-yourself type, you may have to budget for a moving truck of some kind, from your local truck rental location. If you price this in advance, you can save yourself a lot of headaches by having that money put aside to pay for this expense as soon as your credit card bill comes in.

Are you going to have the mover's handle everything from packing up your home to moving it? You should also price this in advance. Even if you can reclaim these costs through a new employer who is paying for the move, you may have to put this money out first before you get it back.

But it's not just moving we have to think about. When we move into another home, we often have more or less space. We may have rooms configured differently. We may or may not like the wallpaper or paint from the previous owners. We might need window coverings. If we haven't budgeted money for those kinds of expenses, we might not fully settle into our homes until we can come up with it.

For instance, are you moving to a bigger place than you live in currently? Have you budgeted for the additional furniture that you might need? While it is possible to move from your current home into a bigger one without buying any new furniture, you might want to give some thought to how your current furniture fits into the new floor plan.

Perhaps you are moving into a lovely older home with great wainscoting. Do you need an armoire in that old-fashioned bedroom? Does your current furniture match the décor (especially if you are planning on living with it for the next several years)? If so, you'll have to have some money available fairly quickly after moving in, so that you can purchase the right furniture and really get settled.

Here's another thing to think about: window coverings. In many cases, an existing home is sold with window coverings to be left by a previous owner. However, if you are buying a brand new home that hasn't had a previous owner, it will be up to you to supply all window coverings. So, unless you want to share your privacy with your neighbours for the first few weeks, you should budget to get the window coverings you want. Still not settled on how to decorate? At the minimum, you should budget for sheers or simple blinds, which will cover the windows but leave your options open for draperies later.

What about that unusual shade of pink in the master bedroom, or that bold purple on the stairway going upstairs? In some cases, you might even want to budget for "bridge financing" which allows you to get into your home and paint or do other renovations, before you have to move out of your existing home. In essence, you'll be carrying two properties for a short time - in most cases a week or two. This can give you all the time you need to repaint, wallpaper or otherwise decorate the home the way you want it. If you are interested in doing this, you'll need to ensure that your closing date will allow you to take possession of your new home before you have to move out of your existing one. Budget both for the financing costs and the decorating costs. These are just some of the potential additional costs when moving to a new home. Be sure to think about your unique circumstances, and put aside the money that you need to be able to handle your move into your new home smoothly.

If you want to buy a home, but have bad credit, you are in a very tough situation. However, home ownership is still possible.

On average, most people in the US now carry about $8,000 in credit card debt. Bankruptcy rates have soared. Credit counselling agencies have lots of business. So, if you are in this situation you are not alone.

Unfortunately, if you have filed for bankruptcy it stays on your credit history for 10 years. This can significantly lower your credit score. If you can avoid bankruptcy by working with a credit-counselling agency, it's usually your best bet. Be sure to pick a reputable one. Not all agencies are as good or have the best programs.

Having said that, you still want to buy a house. So, what do you need to know?

Mortgage lenders increasingly use credit scores to decide who is creditworthy. What is your credit score? Your credit score is a number, which is represents your credit situation as a ranking. If you do not know your credit score you can get a credit report for about $35. It may also be called a FICO score. Fair Isaacs is the company that invented the FICO score and this particular credit score is used by about 70 percent of U.S. mortgage lenders.

If you have a FICO score of 720 or higher, you'll qualify for the best loan programs and interest rates. This can save you thousands over the life of a mortgage. Let's take a look at an example: a score of 720 or higher would qualify for a loan with the best interest rate. A credit score of 700 would qualify for a loan at about ¼ percent higher than the best rate. A credit score of 680 would just qualify for a loan at ¾ percent higher than the best rate.

What does this mean in terms of monthly payments? On a $200,000 loan, a loan at ¾ percent higher would cost about $100 more per month and result in $28,000 more paid by you over a 30-year loan. That's a lot of money.

As you would expect, the interest rates only get higher as your credit score goes down. So what do you do?

Here's the good news: Interest rates are at historic lows. Even the rate that you get with poor credit is pretty good, compared with the interest rates over the last 40 years. Even with bad credit on a first mortgage you are likely to get 8 percent or better.

However, if you have credit problems your second challenge is likely that you don't have much (if any) down payment. That means that you'll need 100 percent financing for your home. That means a second mortgage.

You'll find that a second mortgage will often have a much higher interest rate than a first mortgage. That means that your second mortgage could have an interest rate over 10 percent. If so, your costs of borrowing become pretty high.

Supposing you could afford those kinds of payments, should you do it? It depends on whether the property is a good investment and you can handle the payments on it comfortably. A financial problem could be disastrous in this scenario.

You have options. If you think you can clear up your credit record sufficiently in 2 or 3 years and have a decent place to live in the meantime, you might want to wait. This will give you a chance to both save some money for a down payment and allow you to qualify for lower lending rates later. The money that you would be paying in high interest rates now could become down payment for a property later.

If you are in this situation, talk to a credit counsellor or financial advisor. You'll want to consider the situation very carefully. Most financial advisors will give you some free advice on a first visit. It could be a very valuable investment in your financial future.

It's not just the house that you want to enjoy. You also want to enjoy the place that you live and that includes the people around you: the community, the local church, the school that your children attend and your neighbors.

How do you know if you are going into a good neighbourhood with good neighbours? A real estate agent can help guide you through some of this information, but you need to be prepared to do some of your own research, too. In general, real estate agents will not pass judgement or "profile" a neighbourhood for you. However, you can ask your agent to point you to good information sources on a neighbourhood. You can then make your own judgement.

Let's say you want to research an area and you aren't working with a specific agent. So, where to start? A good place to begin is with the neighborhood and community associations. You may be able to identify such groups from the local city or municipal website. You may even find that many such community groups actually maintain their own sites.

Within these neighbourhood and community groups you'll find people who are committed to the place that they live. They are likely to be involved with or aware of planning and development in the area as well. Such people can be a fountain of information about the quality and character of the neighbourhood, which can help you make a thoughtful decision about whether you want to buy into this area.

Another good strategy is to actually go to the neighbourhood and drive around. Pay attention to what happens in the area. If possible, go at different times of the day and different days of the week. A very quiet neighbourhood on a weekday could be very noisy on weekends. On the other hand, if you are looking for a bustling area, you might find that there isn't much going on during the week, and that could be a problem. A night visit might show you that streetlights have been left burnt out and unattended. All this may be part of your decision as to whether an area is right for you or not.

Check out the public spaces in the area. Perhaps the house you are interested in is close to a local school. Having a school or college as a neighbor can create special problems related to parking or noise. Before moving to a trendy downtown area, you might assess your tolerance for noise or your comfort level walking outside at night.

You might even consider speaking with people on the street that live in the area. Be prepared for the fact that some will not be too forthcoming with information or might think you a bit odd! However, if you can find a sociable type who is willing to strike up a conversation and tell you if there are troublesome neighbours on the street, you can avoid the worst type of problem - the one that you end up living beside.

Are you concerned about your family's safety and the local crime rates? You might want to rely on more than just the look of the area or the median income to help judge the safety of the neighborhood. The best way to do this is to check with the local police department and ask what the crime trend is for community and seek information about crime trends and "neighborhood watch" programs.

While a comprehensive map and lots of research is certainly useful, nothing beats taking a look with your own eyes. Your drive around the area might reveal a busy business or you might notice that a lot of airplanes always seem to be flying overhead. You might also find that your block is a particularly popular cut-through for commuters rushing into or out of town, which may affect your willingness to let children play outside. Walking or biking is often the very best way to really see if a neighborhood fits your needs. The slower pace allows you to see more. The key is to not only check out a potential house, apartment or rental, but to check out what's around that home, too. In the end, doing your homework will mean a much smoother transition for you and your family.