At any given time, there are millions of buyers waiting to snatch up their dream home. These buyers may be preparing to jump into home ownership, or waiting for that dream home to hit the market. Then there are people who believe renting a home is the best way to go. When debating the rent versus buy thought, homeowners will tell you to buy every time but only when you are ready.

Before beginning the process of buying a new home, a 15% down payment needs to be saved. This down payment required on the home could be less, but any home buyer would be happy to have money left in savings after getting that key than running around trying to liquidate assets to keep the home of their dreams.

The closing costs on the home will average about 5% of the price of the home. This is another bit of money that should be saved before the search even begins. If the potential home owner finds the home they wish to buy, they should be ready to buy right then and not after months of saving when that dream home could already be sold.

How much can you afford? This is question that will vary from person to person, but traditionally, the mortgage payment should not be any more than 25% of your total income per month. That is take home income, not gross income because the gross amount is never the same as the amount that available for use on payday. For instance, if a potential buyer brings home $6000 a month, the mortgage should be no more than $1500 a month.

This number may seem conservative, but the true cost of ownership involves more than just the mortgage payment. There are utilities, upkeep and property taxes in addition to home insurance that will need to be paid each month just on the home.

A self run credit report is also a huge item to look over before applying for any mortgage. If you walk into the office blindly, you could lower your credit score without obtaining a mortgage. When the lending company runs your credit report, that could lower your score and if it is too low to meet their lending guidelines, it will be for nothing. When you run your own report, the score is not affected and will not lower.