I purchased my first house in 1998, and I still remember the entire experience. It was exciting, scary, intimidating, and awesome.

It was exciting because purchasing a home was the realization of a huge dream for Jenn and me. It was intimidating and scary because we were signing up for a huge (for us) mortgage. All of our other debts were four or five digits long. This one was six-figure debt!

Here are some important items to consider when preparing to purchase a home.

Financial experts follow a general rule that a house payment (including taxes and insurance) should not exceed 25 percent of take-home pay. This is not a hard-and-fast rule, but it is a general guideline. If one has a payment that exceeds 25 percent of take-home pay, the family’s economy will be dominated by the house payment. This can erode the family’s ability to give, save and spend on other important items.

A great way to understand what one can afford is to obtain a mortgage prequalification. A prequalification is when one applies for a mortgage before selecting a home. It can be used to help entice the seller to sell the house. Sometimes the seller will actually select a lower offer solely because it has approved financing.

When one prequalifies for a mortgage, a credit report will be obtained. The credit score is the most important factor in a lender’s decision to loan money and the interest rate at which it will loaned.

Pull the free credit report from AnnualCreditReport.com and address any negative items before applying for a loan.

Saved down payment money is a great sign to a lender that a purchaser has the ability to manage money well. One is able to qualify for a conventional mortgage if a down payment equal to 5 percent of the purchase price is made. If a down payment of 20 percent is made, one is able to avoid paying for private mortgage insurance (PMI). PMI is usually $50 to $100 per month on a typical first home purchase.

Fifteen and 30 year fixed rate mortgages are the most common types of home loans. The fixed rate means that there will be no change to the interest rate for the life of the mortgage. This is extremely important! One of the key drivers of the subprime mortgage-lending meltdown has been variable-rate mortgages that have nearly doubled over the past few years. This, in turn, has doubled mortgage payments.

It is also important to obtain a mortgage that does not have a prepayment penalty. This allows one to pay off a mortgage more quickly.

On my Web site, JoeSangl.com, there are free mortgage payment and early pay-off calculators available. Check them out.