Buying a home is one of the biggest financial decisions you’ll ever make. It doesn’t matter how much you’re spending, it’s sure to impact your finances both now and in the future.

For this reason, it’s critical to calculate the true cost of buying and owning a home. You don’t want to get so caught up in the actual cost of the property that you overlook other important details.

As you calculate your costs, here are five points of consideration:

1. Cost of the Home

Since this is the biggest expense, you’ll start here. From the start, you should have a clear idea of how much you can afford to spend. This will ensure that you only look at properties that fit your budget.

Tip: you can negotiate the price of the home, with the help of your agent, to save money.

2. Interest

Most people take out a mortgage to purchase a home, meaning you’ll pay interest every month for the life of your loan.

Your goal is to secure the lowest rate possible, as this can save you big money over the long run. Here’s an example:

• 30 year mortgage for $200,000 with a 4 percent interest rate: $955/month
• 30 year mortgage for $200,000 with a 4.5 percent interest rate: $1,013/month

As you can see, half a percentage point saves you $58/month or $20,880 over the course of your loan.

3. Closing Costs

This sneaks up on many people, especially those who are buying their first home. Closing costs include many things, including but not always limited to:

• Application fee
• Closing fee
• Real estate agent fees
• Courier fee
• Credit report fee
• Escrow deposit
• Homeowner’s insurance
• Title insurance
• Origination fee
• Property tax
• Recording fee
• Transfer tax
• Underwriting fee

Several days before closing, you’ll receive a closing statement outlining your costs and how much money you need to bring with you.

4. Down Payment

Gone are the days of buying a home with no money down. There are special circumstances that may allow for this, but it’s not nearly as easy as it was in the past.

You can put down as much money as you want, with most lenders suggesting 20 percent. Here’s why: with 20 percent down, you’re not required to pay private mortgage insurance. This is insurance payable to your lender to protect them in the event of foreclosure.

If you’re required to pay private mortgage insurance, you don’t have to do so for the duration of your loan. Once you gain 20 percent equity in your home, you can request to have it removed.

5. Miscellaneous Expenses

These come into play after moving into your home, and include things such as:

• Maintenance and upkeep
• Upgrades (for example, a new kitchen or bathroom)
• Property taxes
• Homeowners association fee

It’s important to plan for these costs in advance, as you don’t want to be taken by surprise after you move into your home.

Once you calculate the true cost of buying and owning a home, you’ll know what you can afford. This gives you the knowledge necessary to choose a home that won’t bog you down financially.