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If you're thinking about buying a home, look realistically at your current economic standing. Are you debt-free or have a low debt-to-income ratio? Can you afford the upkeep of a home? Do you have a nest egg to pay settlement costs during the home-buying process, and will you have enough left over for emergencies?

Owning a home is preferable to renting; you are building equity while doing the same thing you did at a rental -- living. It is also affordable if you shop carefully and wisely.

If you're renting, you're already paying a substantial portion of your income for housing. Plan to use that money and then some for a mortgage payment. Talk to a lender and find out whether you pre-qualify for a mortgage. He or she will advise you on what type of mortgage is best suited for your income level and housing needs.

There are many ways to cut the costs of buying a home. You can look for properties where the owner is most likely to negotiate down on an asking price, such as foreclosed properties or For Sale by Owner homes.

You can ask the seller to pick up certain closing costs. You also can shop around for a mortgage company that will give you the best deal on fees and points. You can shop for the best deals on attorneys, inspectors and surveyors, too. Many of the costs associated with settlement can be lowered if you take the time to look around.

If you're a first-time homebuyer, there are many state and federal programs available. They can save you money on mortgage interest, down payments and taxes. Ask your lender for more information.