Buying a House? Here Are the 3 Biggest Mortgage Mistakes to Avoid

Now that mortgage rates are declining, you might be thinking seriously about becoming a homeowner. Unfortunately, buying a house is not an automatic slam dunk for your finances (despite what the well-meaning older folks in your life may have told you).

Here are three ways you could seriously screw up the process of getting a home loan -- and regret it.

1. Not shopping around for a loan

Going with the first mortgage lender you talk to could lead to you spending way more money than necessary on a home purchase. You might assume that based on your credit profile and income, you'll be offered the same rate by all lenders, so why bother taking extra time and filling out multiple forms? But this is wrong.

For starters, so many different kinds of financial institutions offer mortgages, it might make your head spin. You can get a mortgage from an online-only lender, a big national bank, or a tiny local credit union. And all of these lenders have different rates and weigh risk differently for you, the borrower.

Oh, and you might find different loan programs with each lender, too -- like adjustable-rate mortgages; mortgages without private mortgage insurance (but you'll usually pay more in another way in exchange for being a riskier borrower); and government-backed mortgage options, like FHA or USDA loans.

By not shopping around with different lenders and getting multiple pre-approvals, you miss out on the chance to save money with a lower rate and perhaps take advantage of a loan program that really works for your life and financial situation.

2. Disregarding your credit

There are a few dangerous credit moves you can make if you're looking for a mortgage. The first is assuming that your credit profile is fine and not checking on it or trying to improve it before you apply for pre-approvals with lenders. Your credit score makes a huge difference in what rates you'll qualify for -- the higher that three-digit number, the less interest you're likely to pay for a home purchase.

You can often get your FICO® Score for free via a bank or credit card issuer you do business with. And pull your credit reports at AnnualCreditReport.com for good measure. Make sure no errors are dragging your score down -- if you find any, you can dispute them with the credit bureau and have them removed.

And if you're currently carrying high-interest debt, paying it down ahead of applying for a mortgage will save you money by improving your credit score. Plus, it'll give you more breathing room in your budget ahead of the biggest purchase of your life.

One more credit score tip for mortgage shopping: Make your pre-approval applications within 14 days of each other to minimize the impact on your credit score. A loan pre-approval comes with a hard credit check, meaning you'll lose a few points.

But if they're all made within that small period, the credit bureaus recognize that you're rate shopping rather than gearing up for a huge credit card spending spree (or other less-than-responsible credit behavior).

3. Trusting a lender's estimate of what you can afford

Finally, it's a terrible idea to trust a mortgage lender's picture of your finances. Sure, mortgage lenders will see how much outstanding debt you have and how much money you make.

But they don't know that you enjoy collecting antique toasters and spend a sizable amount of money at flea markets sourcing them. They also don't know that you're saving money to send a kid to college, or you take an overseas vacation every year.

In short -- they don't know your life and the full range of your spending. Trusting them when they say you can afford a certain amount of house could mean signing on for an expensive home that leaves you house poor -- unable to afford anything other than your mortgage and related costs.

To land on the right home price (and mortgage size) for you, run the math yourself. Look at your actual spending and decide how much you're comfortable devoting to predictable monthly housing costs. And don't be swayed by that perhaps surprisingly large dollar figure a mortgage lender says you can afford -- doing so could be a huge mistake.

It's not surprising that a purchase as substantial as a house could come with a lot of potential pitfalls. Go into mortgage shopping and house hunting with your eyes wide open, and try not to make any of these mistakes.