Buying a home is a milestone, whether it’s your first, third or fourth. In addition to the price of a home, there are some other costs you’ll incur. Some of these costs are one-time fixed payments, while others represent an ongoing monthly or yearly commitment. Not all costs apply to every sale or purchase. However, when you are aware of the following items you won’t be hit with any surprises on closing day.
An inspection performed by a professional inspector is a sound investment. For $300 – $500, you’ll receive a written report on areas that are structurally sound and those where repairs are required.
When you apply for a mortgage, your lending institution will ask for an appraisal of the property. Budget approximately $300 -$ 500.
When you purchase a resale home, you are also required to have a Real Property Report which assesses any changes to the home and property. Normally the Seller would provide this in which case it costs you, as the buyer nothing, but can be added to your costs if the seller does not have a copy and the Financial Institution requires it. Budget around $400 – $600.
Insurance on your home covers the replacement value (structure and contents). To protect their investment on their loan, financial institutions require this coverage. Allow for $500 – $1,000.
There will be an installation fee for utility services, including telephone, water, electricity, gas and cable. Hook up fees range from $50.00 – $175.00 depending upon the service.
A lawyer should review every real estate transaction. Fees are determined by the complexity of the issues involved. Shop around and ask for an estimate prior to hiring any lawyer.
Mortgage loan insurance fee
Depending upon the down payment, some lending institutions require mortgage loan insurance. Budget between 0.5% – 3.5% of the total amount of the mortgage.
Mortgage application fee
Some financial institutions charge a mortgage application fee to process your application. If your request for a mortgage is turned down, most will return the application fee to you. Each time you renew a mortgage some institutions also charge a fee.
Costs for professional movers range from $65.00 – $100/hour for a van and two movers. Prices may be higher during peak moving times.
In some cases, the cost of local improvements made in your area (sewers, sidewalks, alleys) could be added to your tax bill.
With the purchase price of a resale home, the closing is always ‘subject to usual adjustments.’ This means that any amount that the seller has already prepaid will be adjusted so that the home buyer pays the excess amount back to the seller, and vice versa. These adjustments can include: municipal property and school taxes, monthly condominium maintenance fees, first and last month’s rental for rental properties where renters may be in the home, and utilities such as hydro, water and fuel oil, including GST.
Interest adjustment costs
Most lenders expect the first mortgage payment one month after closing the purchase, however, if you close mid-month, some lenders expect the first payment at the beginning of the next month, two weeks before you would normally expect. Or they charge a pro-rated interest to make up the difference.
Land transfer tax
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Most provinces levy a one-time tax based on a percentage of the purchase price of the property. Your professional real estate agent can advise you on which service provider would be the most cost efficient and give you the best service for your particular purchase situation.
If you are interested in knowing how these fee’s affect your situation, please feel Free to contact us. Put our experience to work for you.