Owning your own home may be the fulfillment of your dreams, wishes, and hard work. But a single mistake in buying one can turn the experience into a nightmare. To protect yourself and what might be the biggest investment of your lifetime, you need to understand the ins and outs of the buying process.

There are basically 5 steps in buying a home:

1.Deciding what's affordable.

2.Choosing a home.

3.Negotiating to buy it.

4.Getting the property inspected.

5.The closing.

Each step has its own set of challenges and details to deal with, so it's very important that you speak up whenever anything seems unclear.

How to decide what's affordable.

There's a general rule of thumb here. Let's say that if interest rates are 10 percent, you can afford to buy a house that costs between 2 and 2-1/2 times your income. This formula assumes that you have at least 20 percent in cash to put down on a house, and little long-term debt. If you put down 5 or 10 percent and obtain a loan covered by mortgage insurance, you can usually afford a purchase price that's about 2 times your income'or slightly less.

Now for another rule of thumb: If the interest rates fall to 8 percent or below, the affordable range for a home will rise to more than three times your income with an insured loan. And, of course, if you are debt-free, you'll be able to purchase a house that costs a little more.

How to figure out how much to can afford to pay for a mortgage.

According to the debt-to-income ratios developed by lenders, you can usually afford to pay between 28 and 36 percent of your gross income in debt service.

Why to use a real estate broker or agent.

The benefits of using a broker or agent are significant. Because most homes for sale are listed with brokers through a computerized system call the Multiple Listing Service (MLS), your broker or agent can pre-screen homes and select only those that seem appropriate and affordable for you. That means you won't waste time looking at the types of homes and neighborhoods that don't interest you. Brokers and agents can also make appointments for you, chauffeur you around, use their professional experience to explain what's good and bad about a property, present your offer to the seller, and represent you at closing. Some will even help you get a mortgage or find the best deals on homeowner's insurance. Most important of all, a real estate broker or agent will be on your side in this complicated and serious transaction; he or she will represent your best interests?not the seller's.

How to find a real estate broker or agent.

First, confirm that the individual is a licensed real estate professional. Then make sure that the broker or agent is the type called a buyer-broker. Buyer-brokers can be found in most states by calling Buyer's Resource at 800-359-4092.

Once you have found an acceptable buyer-broker,

you must sign an exclusivity contract.

This contract states that you won't use any other broker to look for a house during a specified time period. If you purchase a home during the ?exclusivity? period, you will pay a broker fee?either in the form of a flat payment, an hourly rate, or a commission on the percentage of the purchase price of the home. The average commission is about 2.5 to 3.5 percent of the price of the home.