For most people, purchasing a home is the largest investment they will ever make. For those who have taken the plunge, they understand it is a complex endeavor which requires preparation and education. Since a home could cost 25 to 45 percent of ones gross income, its important to conduct research and ask questions.

Following are the top eight mistakes consumers make when shopping for a new home:

1. Looking for a home without being pre-approved.

Potential buyers who are competing for a property have a better chance of getting an offer accepted by being as prepared as possible. Imagine a seller who has received multiple offers for the purchase of their property. When an offer is made, the seller is being asked to take the property off the market. However, without pre-qualification or pre-approval, the seller has no evidence that a potential buyer can actually afford the property.

A buyer who is pre-qualified has met with and informed a broker or lender regarding their income, expenses and liabilities. The broker or lender may have also seen the buyers credit report. By undergoing a pre-qualification process, buyers are able to provide a letter stating a brokers professional opinion of what the buyer can afford.

Buyers who are pre-approved have provided a broker or lender written evidence of income, expenses, assets, liabilities, and credit. All information has been verified by the lender. As a result, much of the paperwork for a loan has been completed. Therefore, a pre-approved buyer will probably be able to close quickly. In addition, the seller will have more certainty that the buyer can close the deal. For these reasons, pre-approved status may give the best chance of getting an offer accepted and this may be critical in a competitive situation.

2. Choosing a lender because they have the lowest rate.

While the rate is very important, buyers should consider the total cost of the loan including the loan fees, discounts and origination points. When receiving a quote from a lender or broker, it is appropriate to insist the discount points be distinguished from origination points.

The cost of the mortgage, however, shouldnt be ones only criterion. It is also important to have confidence that the selected company is reputable and will deliver the loan with the terms and costs they promised. If in the final hours of the transaction, it is determined that the lender has suddenly increased their profit margin at the buyers expense, there may not be time to start again with a different lender. Buyers should ask family and friends for referrals, as well as interview prospective mortgage companies.

3. Not receiving a good faith estimate.

Within three business days after the broker or lender receives a loan application, the applier must receive a written statement of fees associated with the transaction. This is both the law and the best way to determine what one will pay for the loan. A buyer should bring the Good Faith Estimate (GFE) when signing loan documents. Furthermore, buyers should not be expected to pay fees which are substantially different from those contained in their GFE.

4. Not getting a rate lock in writing.

When a mortgage company informs a buyer that they have locked a rate, it is important to get a written statement detailing the interest rate, the length of the rate lock, and program details.

5. Using a dual agent, or an agent who represents the buyer and the seller in the same transaction.

Buyers and sellers have opposing interests. Sellers want to receive the highest price; buyers want to pay the lowest price. In the standard real estate transaction, the seller pays the real estate commission. When an agent represents both buyer and seller, the agent can tend to negotiate more vigorously on behalf of the seller. Buyers may be better off having an agent representing them exclusively.

6. Purchasing a home without professional inspections.

Unless buying a new home with warranties on most equipment, its highly recommended to get property, roof and termite inspections. Inspection reports are great negotiating tools when asking the seller to make needed repairs. When a professional inspector recommends that certain repairs be done, the seller is more likely to agree to do them.

7. Not shopping for home insurance until ready to close.

Start shopping for insurance as soon as there is an accepted offer. Many buyers wait until the last minute to get insurance and do not have time to find the best possible deal.

8. Signing documents without reading them.

Whenever possible, buyers should review in advance the documents theyll be signing. While some specifics of the transaction may not be known early in the process, the overall documents are standard forms and are available for review.