Buying your first home is always a good investment. For most, it's the biggest investment in their life and can become quite an emotional affair. Talk of house prices crashing down and interest rates moving up can have you feeling like you are going around in circles. But consider this: we cannot predict the future with accuracy. What we do know is our current financial situation, our preferred lifestyle and what we would like to happen, in the following years. This is the information we should base our financial decisions on. Buying a home involves three key aspects: finding a home, finding a home loan, and finding a lawyer to do the legal paperwork.

First, there is the real estate agent who is paid a commission. Although they work for the seller, a fair price can still be reached through negotiation.

Then there is a lawyer needed to facilitate the process. Try and pick one who has been used by family or friends previously. To ensure that you don't sign an unfair sale and purchase agreement, get them involved early on in the process.

Some buyers first find a home and then look for a home loan, while most prefer to get a pre-approved loan, so that they can have a fair idea of their budget while looking for a house. A pre-approval, which doesn't cost you anything, is a formal indication of how much you could borrow, and generally lasts for three months. You could visit your banker, or call a mobile lending manager to your home. This will give you a good idea of the products available from the bank you approach. Another option is approaching a mortgage broker. Finding a broker who is a member of the New Zealand Mortgage Brokers Association will ensure that you are dealing with a person who has relationships with at least six lenders (most deal with up to 15). This is a great idea if you don't have the time to become an expert on all the products offered by different banks. Next month, we'll look at the criteria banks consider while processing a loan request.