Buying a Home: What Expenses to Expect
Budgeting for a new home can be complicated. Among mortgage installments and the down payment, there are a multitude of other expenses that must be taken into consideration, including budgeting for closing cost and unexpected expenses. The last thing you want is to be caught off guard, financially; bushwhacked by taxes and other hidden costs.
These expenses can vary; some expenses are one-time costs, others can be monthly or yearly payments, while some may not even apply to your individual situation. However, it’s best to be informed of all possibilities, so you’re prepared for any situation that may arise. You can use the following list to determine which costs will apply to you prior to structuring your budget:
1. Purchase Offer Deposit or Earnest Money Deposit at approximately 1% of the Purchase Price.
2. Inspection by a certified building inspector for new construction homes and for a resale home. A Home Inspector will have a cost starting at approximately $300, considering the size of the home.
3. Appraisal fee: Your lending institution may request an appraisal of the property. In the event they do, the cost of this appraisal will be your responsibility, with costs ranging from $450 and higher.
4. Survey fee: Your lending institution may request an updated property survey if the home you’re purchasing is a resale, as opposed to a newly built home. In this case, you would be responsible for the survey which will be approximately $300 or more.
5. Mortgage application at your lending institution.
6. 5% GST: this fee only applies to newly built homes or existing homes that have recently undergone extensive renovations.
7. Legal fees: More than likely, a lawyer should be involved in every real estate transaction to review all paperwork. However, be sure to shop around to make sure you hire the right fit for you as legal experience and rates can vary quite a bit.
8. Homeowner’s insurance: Your home will serve as security against your loan for your financial institution and buying insurance in an amount equivalent to or greater than your mortgage loan is a requirement.
9. Land transfer (purchase) tax: This tax can vary greatly and applies in any situation in which a property changes owners.
10. Moving expenses.
11. Service charges: Any utilities you make arrangements for at your new home may come with an installation fee. For example, adding cable or a telephone usually includes service charges.
12. Interest adjustments.
13. Renovation of new home: Many homeowners like to paint or do other renovations prior to or upon moving into their new home in order to make it their own. Be sure to budget accordingly if this is your plan.
14. Maintenance fees: For example, if you are moving to a new condominium, you will likely be charged a monthly condo fee which covers the costs of common area maintenance.
Consider these costs and make your plans accordingly. We are happy, willing and able to help you through this process. Contact us so that we can go through this phase of your life effectively.