Home Buying Costs

Home Buying Costs

In preparing to buy your first home, you need to budget for expenses that will be incurred up-front in the process including:


Deposit

This is part of your down payment and must be paid when you make an Offer to Purchase.  Deposits are usually around 1-2% of the purchase price depending on a few factors.  Sellers may request that the deposit be increased once all conditions have been satisfied so there is more for the Buyer to lose if they are to back out of the deal last  minute.

Down Payment

At least 5% of the purchase price is usually required for a high-ratio mortgage and at least 20% of the purchase price is usually required for a conventional mortgage.  A conventional mortgage does not necessarily require mortgage insurance to be applied through CHMC or Genworth

CMHC Mortgage Loan Insurance

The amount of the premium varies and can be between 0.65% and 2.75% depending upon how much of the purchase price/home value is financed with a mortgage loan.

Appraisal Fee

Your mortgage lender may require the property to be appraised at your expense.  An appraisal is an estimate of the value of the home.  The cost is usually between $350 and $450 and must be paid when you contract for those services.  Most banks will waive this fee in return for your mortgage business, which is another reason to shop around.

Home Inspection Fee

A satisfactory hoome inspection is often an important condition of the Offer to Purchase.  A home inspection is a report on the condition of the home and generally ranges around $400-500, depending on the complexities of the inspection.  Larger or older homes may cost more, especially if there is any suspicion of latent defects.

Land Title Transfer

You have to pay this upon closing, which will be included in your lawyer's closing fees.  The cost is based on the value of the home and is $3 for every $1000 of home value.

Prepaid Property Taxes to reimburse the vendor (if any)

Depending on how the seller paid their taxes, you may have to reimburse them for the taxes that they have paid from the date you take possession.  If they have paid the taxes for the entire year, you may have to reimburse the sellers for a large portion of the yearly taxes.

Home Insurance

The mortgage lender requires this because the home is security for the mortgage.  TThis insurance covers the cost of replacing the structure of your home and its contents.  Property insurance must be in place on closing day.

Survery or Real Property Report

The mortgage lender may ask for an up-to-date survey or real property report prior to finalizing the mortgage loan.  If the seller does not have one or does not agree to get one, you will have to pay for it yourself or rely on Title Insurance.

Legal Fees and Disbursements

Must be paid upon closing and cost a minimum of $500 (but usually around $1000) plus GST.  Your lawyer will also bill you for any disbursements they incur such as land title searches to check on the legal status of the purchased property.

Title Insurance

Title insurance covers loss caused by defects of the title to the property and may be recommended by your lawyer.

Costs After Possession

  • Appliances (if not included)
  • Yard maintenance tools
  • Window treatments (if not included)
  • Decorating materials - paint, flooring, tools, etc
  • Moving expenses
  • Service hook-up fees
  • Condo Fees (if applicable)
  • Repairs, reno's, upgrades
  • Household items (first time buyers often forget about the little things such as garbage cans and shower curtains)


Ryan Souster

Ryan Souster

REALTORĀ®
CENTURY 21 Fusion
Contact Me

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