Don't get all pumped up about buying a home just yet. You need to prepare for items you may run into during the mortgage application process. Below are steps that could save you many thousands of dollars or even mean the difference in whether you can buy your dream home or not.

1. start by pulling your Credit from all three Bureaus and review it thoroughly. Be sure and look at any public records like judgments, bankruptcies and tax liens. Sadly, many companies are quick to add negative items to your credit report but are slow to reflect the fact that you have satisfied them.

2. Dispute any errors on your report with all three credit bureaus. You can do this through the three bureau’s websites (Transunion.com, Equifax.com and Experian.com).

3. Set a firm budget for how much house payment you can afford. Don't forget to include 1/12th of your annual taxes and property insurance. Also, be sure and consider how you would cope if you had a drop in income such as one spouse loosing a job. Just because a lender or mortgage broker says you qualify for X price home does not mean you should buy it.

4. Don’t get caught up in buying a home just to ‘keep up with the Jones’. As a part of your evaluation be sure and consider 1) How good the school systems are, 2) How much commute time there will be, 3) How quickly the home would sell if you had to sell it quickly, and 4) Any money you will have to come up with to fix up the home to suit your needs, particularly if you borrow all or nearly all of the purchase price.

5. Avoid borrowing significant money right before you buy a home. This includes cars, credit cards and personal loans. If you just have to buy a car, wait until after you buy the home. The extra debt can cause you to qualify for less home than you would without the debt. Deciding to buy a cheaper car after you bought a new home is far better than the other way around as a car depreciates dramatically and most homes increase in value.

6. Do not go from being salaried (W2) to being self employed at least a year and in most cases 2 years before trying to get a mortgage to buy a home.

7. Don’t pay off old judgments or old collections to try to improve your credit score. Often times this will LOWER your scores.

If you do some basic planning before buying a home, you can make the process much less stressful and also save you a ton of money.

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