If the house doesn't appraise at the amount expected, other alternatives are typically found. A second appraisal may be sought, the buyer may be willing to put more money down, the seller may adjust the price or offer other concessions, or the two sides may negotiate to split the difference between them.

Basically, title insurance assures that you have clear title to the home you're purchasing. A title search is the primary component of "due diligence," a process that will be started either by the title company. The title search determines whether the seller actually owns the property and if there are any claims against it.

Buyers often choose to pay a one-time charge called mortgage "points" in exchange for a lower interest rate. Usually paid at closing, each "point" costs 1% of the mortgage amount, or $2,000 on a $200,000 loan. The lower rate reduces the monthly mortgage payment, and points paid in conjunction with the purchase of a home are generally tax-deductible in the year they're paid (see tax advisor). Monthly savings will often exceed what was paid in points in just a few years' time.

Your credit rating is based on a combined score generated from three credit bureaus who look at your credit history, amount of credit available, and recent inquiries to determine what's called your FICO score. For a small fee, you can get your score or review your credit report by going online to www.myfico.com or contacting the credit bureaus directly at:

Equifax: (800) 685-1111
Experian: (888) 397-3742
TransUnion: (800) 916-8800