They say that buying a home is the largest purchase you’ll make in your life, and yet most people don’t really understand what it is they are buying. Sure, we can look at the price tag of the house and know the dollar amount, but there’s a lot more that goes into the true cost. In fact, there are four factors that go into that true cost, so truly ensure that you’re getting not only the best price on your home, but paying the lowest total cost, it’s important to weight out all four:

We know this one - prices go up, and then they go down, and then they go up again. So why don’t we just all buy when the prices are low and leave it alone when they are high? But in real life it’s not that simple, because we aren’t just buying real estate as an investment, we need someplace to live! It's easy to figure out the price, but there are other factors that go into the cost.

When you buy a house, you are not buying the house. Unless you’re paying cash for a property you need a mortgage loan, and that means you’re buying the money (from the bank) to buy the home. Therefore the interest rate you pay on this loan is so important. A $350,000 home at 4% and a $250,000 home at 6% interest rates yield you around the same total cost long term, so this is a factor you can’t overlook.

A simple function of supply and demand, when inventory is low, there are more homes to choose from, less offers to compete with yours, and generally prices go down. Buyers might also be able to request more repairs or money toward closing costs. But when inventory shrinks, sellers have more leverage.

Should you take out a conventional 30-year fixed loan? Or how about a 15-year loan, which has higher payments but will pay off the mortgage in half the time? How much down payment are you planning on putting down? Is a FHA or VA loan right for you? All of these loans have different pros and cons, so consult your mortgage professional and find the one with that’s right for you.