When editing your own work it can be really hard to look at your novel objectively. You worked hard for months, maybe even years, taking the hatchet to it can be a bit traumatic. But for the sake of the novel, it must be done. Take off the rose colored glasses and prepare to polish that baby up. Professional editing is expensive. Not to mention, if you can edit decently yourself, you become that much more attractive to an agent and or publisher. Don't make the mistake of thinking the publisher's editor will do all the work, that just doesn't happen any more. Besides, the better the piece of work you submit is, the more professional you look and the more they'll want to work with you again.
So how does one go about doing it? Spellcheck is wonderful but it doesn't catch everything and it makes mistakes. Use it, but don't rely on it alone. Polish up your English skills. Go over your kids English text books, or even pick up one of your own. Know the format publishers expect to see your work in. Usually that's 12 font, double spaced, 1 inch margins all around, with the title of the work & your name as a header and the page numbers as a footer.
Here's a big mistake a lot of agents/editors complain about: number your chapters properly! Go through and thoroughly check that your chapters are in numerical order, you don't repeat a number, and that they are in a natural break for the book. Make sure your chapters aren't too far apart. When I went back over my first book I realized I hadn't broke for another chapter the entire final 70 pages! Typical chapters can be as short as a page (but don't over do that!) but shouldn't be much longer than twenty. Readers like a place to break.
On to the tough part, cutting. When reading back over your work try to cut anything that doesn't accomplish something for your novel, meaning for the protagonist, antagonist or the plot. If you find a scene that doesn't have a purpose, delete it. This is not to say that you can't set a scene, just don't go off on a wild tangent that isn't going to tie in later. There are also a lot of words we tend to use that are completely unnecessary. I'm guilty of this myself. That is a common one, often you can do without it completely. So,well, and though are a few more. If you think you might have overused a word go to the 'find' button and type it in. You might be surprised by how many times it pops up in your novel.
And of course look for mistakes or parts that just don't read smoothly. If all of this is just not something your good at don't worry, you can hire an editor to do this for you. Just be prepared to spend a chunk of cash and ask around for someone your writer friends recommend!
Here's a link on commonly overused words to look for in your novel: http://preciseedit.com/Article10OverusedWords/tabid/215/Default.aspx