Buying a home is a heady experience, but it’s also one where it’s easy to get in over your head. Follow these three essential tips for first time home buyers to make sure your first home purchasing experience doesn’t become a nightmare.

Figure out what you can afford

The first and most important step to take when shopping for a new home is to figure out what kind of monthly payment is right for you. Do this before you begin to look at homes, otherwise you risk falling in love with a house you can’t afford.

Figuring out how much you can afford to spend on a house means sitting down to look at your monthly budget. Evaluate how much money is coming in and how much is going out. If you see ways to adjust your spending so you have more cash flow, do it. Just be careful not to put yourself on such a strict budget that you won’t be able to enjoy living in your new home.

A good rule of thumb is to put no more than 28% of your annual income toward housing expenses. Given the price of food, clothing, entertainment, travel, and other items, you won’t want to go much past this number.

Get pre-qualified

Once you know how much you’re willing to spend on monthly housing costs, start shopping around for a lender. Note that it’s best to do this before you start looking at homes. Your goal is to find a lender who can make you a solid offer and who will pre-qualify you for a mortgage.

It’s best to get pre-qualified before you start shopping for homes so you can be ready to make an offer when you find the perfect house. Without pre-qualification, you risk finding the ideal house for your needs only to lose it to another buyer who is prepared to make an offer while you hassle with the paperwork of prequalification.

A warning on getting pre-qualified:  You may find that your lender pre-qualifies you for a mortgage that is much larger than the amount you initially wanted to spend. This is fine, as you can always purchase a house at a lower price than the amount for which you were pre-qualified. It’s important to stick to the price you know is best for you – don’t allow your lender to dictate how much of your money should go toward housing costs.

Shop location

With your maximum price limit and your pre-qualification papers in place, you’ll be ready to start shopping homes. Save yourself time and energy by “pre-qualifying” specific housing locations. In other words, don’t merely drive around with the goal of finding a house for sale. Instead, locate neighborhoods and specific districts where you know you’ll be happy living.

The first step to shopping locations is to check the selling prices of homes in various neighborhoods in your town. This information can usually be found in your local newspaper.

When you know which neighborhoods you can afford, narrow down your choices by looking at neighborhood amenities. Check up on the quality of schools in the area if you have children. Consider access to public transportation. Look at the proximity of the neighborhood to your place of work. Essentially, make sure the area will offer you more than just a house.

A little ground work will take you a long way

After zeroing in on your preferred neighborhood, you’ll be well-equipped to begin looking at homes with a reputable real-estate agent or on your own, if that’s your preference. Remember that researching your basic needs before going out to look for houses is essential if you want to minimize the time you spend looking for a house while maximizing the total satisfaction you’ll get from your home-buying experience.