If you're like most people, buying a house will be the biggest purchase of your entire life.

And while we all want to buy our "dream house", most of us need to stay within a budget when buying a house, especially if you are a first time home buyer. After all, you DON'T want to buy your house and THEN find out you can't keep up with the mortgage payments! Fortunately, the mortgage lenders don't want you to do this either, so they put a limit on how much they will lend you.

Even so, all lenders are different and you will find that each one will allow you to borrow a slightly different amount, with a slightly different interest rate, and with slightly different terms. So, it is a good idea to shop around and compare interest rates and fees

We decided to work with a mortgage broker (someone who has access to several different lenders and can shop around for you). You can find one in your local yellow pages, or apply online and get a few different quotes.

Here's the best way to get the lowest rate on a mortgage There are so many decisions when getting ready to buy a house. One of the most important is your mortgage. Some home buyers just call their local bank and get their mortgage there. But your best option is to shop around & compare. Lending Tree will give you up to 5 different quotes so you can compare interest rates and fees and get the best possible rate. You might to able to save a few hundred dollars a month by shopping around. It's a free service and will only take a a few minutes to complete an online quote form, and then you'll know that you'll be getting the best mortgage.

Knowing exactly how much you can afford will help you a lot when you start searching for homes to buy. After all, there's no sense wasting your time looking at homes you won't be able to buy because you can't afford them!

5 Reasons To Apply For A Mortgage BEFORE You Start House Hunting:

• You’ll find out how much you can borrow.
  
  If you look at your income, expenses, and savings you’ll get a good idea of how much you can afford to spend on a home. But unless you have enough money saved up to pay cash, you’ll need a mortgage. And what the banks are willing to lend you may not match what you are willing to spend. So going through the application process will give you a more accurate number.
  
  
• Based on this, you can decide how much of that you can really afford.
  
  The banks only look at your numbers. But you know how much you actually WANT to spend each month on your mortgage payment. For example, you may be approved for a $200,000 mortgage with a $1500 monthly payment. But you may have other financial goals, and are only willing to spend $1200 a month. So, don’t just automatically go out looking for homes for the full amount a bank will lend you.
  
  
• You can work on lowering debt & fixing your credit, if necessary.
  
  When going through the mortgage application process, your lender can help you look at your amount of debt, and your credit history, to see if there is anything you can do to be able to either borrow more money, or lower your interest rate. This takes time so the earlier you apply the better.
  
  
• You can get pre-approved.
  
  If you just want an estimate you can just get pre-qualified. But if you want a more definite answer on how much you can borrow, you can get pre-approved. This doesn’t mean your loan is finalized, but it means that you provide more information and documentation up front, so once you find your home you can move faster. And…
  
  
• You can then give the pre-approval letter to the seller.
  
  This will make your offer much more solid, since the seller knows you’ve given the bank more information and you are much more likely to get the amount of money you are offering.

So, if you really want to know how much you can afford - and get the best possible home loan program and mortgage rates - it's a good idea to actually apply with a few mortgage lenders for your new home loan (especially if you are a first time home buyer and new to this process). Now that you know how much house you can afford, you're ready to begin searching for your dream home!