A COMMON QUESTION – OTHER THAN DOWN PAYMENT, WHAT OTHER COSTS WILL NEED TO BE PAID TO PURCHASE A HOME?
There are a few different areas of costs when it comes to purchasing a home…costs before you complete the agreement to purchase a new home, costs before you move into your home and ownership costs.
Before you have a firm purchase…
Home Inspection Fee – A home inspection is often a condition of the offer, particularly if it is a pre-owned home. The home inspector goes over the house and provides a report on the condition of the home. The cost of this service can vary.
Deposit – The deposit is required when you make an offer on a property. Once the offer is accepted, the deposit is held in trust until the closing of the sale. At this time it gets applied to the down payment. The deposit amount required is determined usually by the value of the property and what your real estate agent thinks is appropriate.
Appraisal Fee – an appraisal estimates the fair market value of the property. If your mortgage is an insured mortgage (less than 20% down payment), an appraisal is usually not required. If an appraisal is required you should plan on a min $325.
Closing Costs – these are the expenses that you pay when you meet with your lawyer (to sign title transfer and registration of mortgage)
Legal Fees – these are the fees your lawyer charges to complete the paperwork for you
Land Transfer Tax – these are the fees that are paid to land titles when you purchase a new home
Title Insurance – these protect against losses of a property ownership dispute, should there be one; quite often the lender will require one on their behalf. You can also have one on your behalf.
Property Tax Adjustment – if the seller has prepaid taxes for any months after the sale date, they will need be reimbursed
Other Home Ownership Costs
Mortgage Insurance – if you put less than 20% down, then mortgage insurance is required. It can be paid up front but most will have it included in their mortgage. This insurance is provided by either CMHC, Sagen (Genworth) or Canada Guaranty
Home Insurance – all lenders require mortgages to insured against fire and other damage.
So when my clients are planning on purchasing a home and we are going through the preapproval process, I will go through each of these items in detail so my clients can anticipate what their extra costs are going to be. Feel free to reach out to me if you have any questions.
Call Deb Murdoch today!
The Mortgage Group