A home is the single most expensive thing most of us will ever buy. That's why you need to put as much time and effort into finding a mortgage, and preparing yourself financially, as you do hunting for your dream house or condo. So, take a few minutes to look at the seven biggest mistakes you can make when shopping for a mortgage and at how to avoid making them. - Advertisement - Mistake Number One is not aggressively shopping for the best deal. Check the rates and fees dozens of lenders are offering on our rate charts. Obtain bids from local banks or mortgage brokers. Getting the right loan, at the right price, can save hundreds of dollars a month and tens of thousands of dollars over the life of your mortgage. Click here for our step-by-step advice on how to find the best loan. Mistake Number Two is applying for a loan without checking your credit history for mistakes that make it more difficult for you to qualify for a loan, or require you to pay a higher interest rate. To get a free credit report from each of the three major credit reporting go to www.annualcreditreport.com. Each credit report will tell you how to correct mistakes or submit an explanation for legitimate black marks against your credit. Mistake Number Three is spending too much on a house. Avoid that by calculating how much you can really afford. Start by looking all of your other bills and determining how big a monthly mortgage payment you can handle. (Include a realistic estimate for taxes, insurance and condo or association fees.) From that, calculate how much you could borrow at prevailing interest rates. Add how much you've saved for a down payment and that should be your limit. Don't let real estate agents repeatedly show you houses outside your price range. Don't listen to loan officers who push you to borrow more than you think you can afford. Click here for help deciding how much house you can afford . Mistake Number Four is not getting pre-approved for a loan. This is an important reality check and it's free. A lender will look at your credit history, how much you earn, how much you've saved and how much you owe, and decide how much you can borrow. That doesn't mean you have to borrow that entire amount. But if you can't get pre-approved, or can't get pre-approved for as much as you want to borrow, that's a big red flag. Click here to learn all about getting pre-approved. Mistake Number Five is taking out a potentially dangerous loan that sends monthly payments skyrocketing beyond what you can afford. A traditional fixed-rate loan will have the same monthly payment at least for principal and interest -- for as long as you keep it. The same cannot be said for adjustable rate mortgages or ARMs, interest-only loans and the most hazardous of all, option ARMS. It's critical to understand all the terms of your loan and be prepared for the low monthly payments you start out with to grow substantially in a few years, a single year, or even the first month. Click here to learn more about option ARMS and interest-only loans. Mistake Number Six is failing to plan for the unexpected. Fires and natural disasters such as hurricanes, floods, tornados and earthquakes can strike without warning. Buy enough insurance to rebuild the house and replace everything in it. Illness, injuries and layoffs must be anticipated as well. You need enough savings to live at least three months, and preferably six months, without a paycheck. Mistake Number Seven is not appreciating how much owning a home really costs. Make sure the heating and cooling bills don't deliver a nasty surprise. Be prepared to spend an average of a hundred dollars or more a month on everything from toilets that won't flush to lawnmowers that won't start to furnaces and roofs that must be replaced. If you've been renting, you need to be especially careful not to let those expenses wreck your budget.