Written by Nikki Smith | 21 April 2010

During my daily round-up of real estate news, I came across another list of common homebuyer mistakes, this one from CNN Money. A lot can go wrong if you try and short cut the road to homeownership. No wonder everyone says buying a home is one of the biggest decisions you'll ever make!

1. Know your credit score

The lower your credit score, the more expensive it will be to borrow money. Over the lifetime of a 30-year mortgage, we could be talking a difference of tens of thousands of dollars. That's money you could use to buy a new car or pay for college tuition in the future.

Check out Credit Karma (at your own risk) where you can obtain a free credit score without the sneaky "trial subscriptions." Beyond your credit score, the federal government says you're entitled to obtain a free credit report every year from each of the three major credit bureaus. Take advantage of it. Once you know your score, you can take action as necessary to correct any errors or pay down debt to raise your credit score.

2. Don't open any new lines of credit

Thinking about buying a car or opening a new credit card account while you're shopping for a house? Don't. Any new lines of credit you open will lower your credit score, which means you'll have to pay more to borrow money.

Mortgage lenders are known to re-check your credit score in the weeks leading up to closing. A sudden drop in your credit score could halt the lending process in its tracks.

3. Skimping on the home inspection

A proper home inspection will cost you a few hundred dollars beyond your closing costs. But discovering a major defect in a property before purchase could save you thousands of dollars in costly repairs.

Hire a qualified home inspector with a solid reputation, but don't blindly follow your real estate agent's recommendations. Find an independent home inspector who will have your best interest in mind. Talk to friends or family in your area to learn about their experiences.

If you're new to an area – or don't have any friends :( – you may like Service Magic (again, use at you're own risk), an online service that helps consumers find reputable contractors, including home inspectors. Their website is also packed with articles about all kinds of home repairs and services, written by professionals, that can provide background for just about any home project and help get you started.

4. Foregoing professional help

Remember, just about everyone involved in your real estate transaction stands to profit from the sale. This includes the home seller, the mortgage lender and real estate agents. A real estate attorney is an objective third party who will look out for your best interest, usually for a flat fee.

We've got three attorneys on staff at Federal Title and several more working in the same office suite for our general counsel Tobin, O'Connor & Ewing. They can help you with contract and boundary disputes, deed transfers, landlord-tenant matters, lease-occupancy agreements, foreclosures and more.

Whether you use the services of a real estate attorney or not, you will be required to purchase title insurance when you buy your house. As the homebuyer, you have the right to choose which title company handles your settlement. Choosing an independent company will save you money (as much as $1,600!) and give you peace of mind knowing they're looking out for your best interest.

But don't take my word for it: Get a quote for title insurance and decide for yourself.

5. No contingencies

When you're serious about purchasing a property, you and your real estate agent or attorney will draw up a sales contract, and you'll have to put down an earnest deposit of anywhere from 1% to 3% of the sales prices.

For example, on a $600,000 sales price, your earnest deposit would range from $6,000 to $18,000. In the current market, we're seeing a lot more earnest deposits near the higher end of that scale.

It's in the seller's best interest to limit the grounds for canceling a contract, so of course they want to limit the number of contingencies in  the contract. It's in your best interest to give yourself an out if a problem arises with the property.

An inexperienced buyer could wind up signing a contract that doesn't include some of the most common exceptions – such as major problems during the home inspection, failure to obtain financing or failing of the house to appraise – and poof! Just like that you've lost your down payment or at least a pretty piece of it.

Contingencies are crucial.

6. No budget for insurance

Insurance professionals will tell you the most important thing to investigate before you buy your home is how much it will cost to insure it. Budgeting for insurance is definitely important. After all, what good is buying your dream home if it makes you house poor?

Note that earthquakes and floods are NOT COVERED by a standard homeowner's insurance policy. They cost extra. In some coastal areas, flood insurance can surge to over $5,000 per year on top of your regular insurance policy and mortgage insurance (which lenders require until your loan-to-value ratio is at least 80% or greater).

Read CNN Money's take.