After years of apartment dwelling, people can grow tired of cramped living quarters and never-ending rent payments. To spread out a little and invest their money, millions of renters make the transition to home ownership every year. Before you grab your wallet and head to the nearest bank to secure a mortgage, you should prepare for your purchase by doing two three things.

1: Evaluate Potential Expenses

One of the biggest mistakes that people make when they purchase a home is taking out a larger mortgage than they can afford. On average, banks are willing to lend you a mortgage that has payments that equate to less than 28% of your yearly salary. For example, if you and your spouse have a combined income of $100,000 per year, banks figure that you could pay about $28,000 per year in mortgage payments, or about $2,333 per month.

Since people who make $100,000 per year make over $8,000 before taxes and other deductions, a measly two grand for a mortgage might seem like a walk in the park. Unfortunately, people frequently forget to take into account expenses tied to home ownership such as repairs, HOA fees, and yard maintenance.

Before you apply for a mortgage, go over your budget in order to evaluate your ability to pay your monthly bills. Don't forget to think about potential moving expenses, debt repayments, and monthly memberships. Remember that you can always move to a bigger house in the future, but paying for a place that you can't afford could seriously cramp your lifestyle.  

2: Improve Your Credit

In addition to not taking out a larger mortgage than you need, it is also important to get the best interest rate that you can. Interest rates can vary greatly depending on your credit score, so a few bad marks might make a big difference in your monthly payment.

For example, if you take out a $200,000 loan with the standard 30-year repayment terms, a 4% interest rate would make your payments about $1,163 per month. On the other hand, if you have a bad credit score and the bank offers you a 6% interest rate, your monthly payments would be around $1,407 per month.

Since a few hundred dollars can make or break a budget, it is a good idea to take the time to improve your credit in the years before you apply for a home loan. To do this, make all of your loan payments on time, and pay down your credit card debt. To qualify for the best rates, most financial experts recommend using less than 30% of the total limit on your credit cards.

By preparing for your home purchase, you can avoid the hassles that come along with unplanned expenses, so that you can live comfortably in your new home.