Owning a home is one key to the "American Dream", but with foreclosure rates at a 50-year high in the U.S. it has never been more important to be a careful home buyer. Below are four steps most first-time home buyers should take before buying a home:

Always Assess your Credit - All mortgage lenders use FICO credit scores to determine loan eligibility. The higher your FICO credit score, the better your home loan interest rates. With a score of 650 or above, you're considered a good risk and should have no problem securing a mortgage. If your score is 600 or below, you may want to consider improving it before applying for loans. Remember that mortgage lenders are reluctant to lend money to people spending more than 35% of their gross monthly income on debt.

How Much Are You Borrowing - Many first-time home buyers make the mistake of borrowing as much as their banks or credit unions are willing to offer. While most lenders are comfortable issuing loans worth up to 33 percent of your gross income, many financial planners believe 25 percent is a more prudent number.

Onging Costs - One of the upsides of renting is that when the pipes break or the heater breaks, you can simply call your landlord to have it repaired. As a homeowner, you'll be in charg of these responsibilities. So, before taking out a mortgage be sure to factor in expenses like home improvements, basic maintenance and property taxes.

You Must Save - Buying your first home isn't just a matter of bidding on a house and signing on the dotted line. Before you make an offer on a home, be sure to set aside enough money for a home inspection and appraisal. These fees vary from region to region, so ask your real estate agent how much you can expect to pay. And don't forget about closing costs! They generally run you from 3 percent to 6 percent of the cost of the house, according to the National Foundation for Credit and Counseling.