Buyer

And while you're at it, check your credit score and look over your credit report. Focus on paying down your credit cards, paying your bills on time, and raising your credit score. (A score of 720 and above is generally considered good, and 750 to 850 is excellent). You want your future mortgage lender to like what it sees when it comes time to request a loan for a house.

Most experts suggest that you have at least 20 percent of the house's purchase price saved as a down payment. You can certainly buy a house without that – and many people do – but there are plenty of good reasons to put down at least 20 percent. For starters, you'll almost certainly avoid paying private mortgage insurance, or you won't have to pay it for long. PMI is typically 1 to 2 percent of the value of the loan, split into monthly payments. It may not seem like much, but if it adds, say, $100 to your monthly mortgage payment, you can see why you'd like to avoid it.

Regardless of what you have in the bank now, this is a long-term, year-after-year, month-after-month expense you're going to take on. So prepare your budget now so that you don't encounter surprises down the road.

Will you take out a fixed-rate mortgage or an adjustable-rate mortgage? With an adjustable-rate mortgage, you'll get the lowest rate available – but then it will adjust after several years, often based on an index, like the Cost of Funds Index. The main point here is that your payment with an adjustable-rate mortgage won't stay the same. But the interest rate for an ARM is low, and if you believe you aren't going to live in your house for long, it might be a good fit for you. Some ARMs also have a limit on how much they can adjust, which may make them more appealing.

Most homeowners go with a 30-year mortgage. Others try for a 15-year loan or somewhere in between. A 15-year loan is a shorter-term loan, and you typically get a much lower rate than a 30-year loan. For example, if you were to take out a 15-year mortgage now, the average rate is 3.25 percent; for a 30-year mortgage, it's 4.14 percent.

Start gathering your federal income tax records for the past couple of years, recent paycheck stubs, canceled checks for rent or utility bill payments, and any other paperwork a mortgage lender might want to see, like credit card and student loan information.

It isn't enough to think you want to live in a certain geographical area, like the west side of the city, or the east side. Consider tax rates, which will be different in different communities. Community HOA fees or dues is another consideration. There are some neighborhoods you may not be able to afford, so it's good to get a sense of that early on to avoid experiencing a huge letdown.