So you have saved up your hard earned money for a down payment, meaning you’re all set to make your first time home purchase, right? Well almost…
In addition to the down payment there are many other costs associated with purchasing a home, these costs are typically referred to as closing costs.
The closing costs highlight the costs associated with finalizing your purchase and these costs are usually paid out of pocket meaning they cannot be rolled into your mortgage. This is a big reason why preparing for your closing costs ahead of time, before you start looking for a place to buy will play a major part of making things smooth and stress free as possible. In fact, if you are putting less than 20% down, meaning you will be taking an insured mortgage (in which the lender is protected in case of mortgage default) the insurer may expect to see 1.5%-4% of the purchase price saved in closing costs before approving the mortgage. Below is a list of costs to consider when purchasing a home.
These are costs associated with the lawyer or notary to handle all the legal paperwork which is required when completing a real estate transaction. They assist in transferring legal title of property from sellers name to your name and verify the lender is registered correctly on title.
Depending on which province you are located in and what kind of property you are purchasing there will be Property Transfer Tax or Land Transfer Tax. These taxes can be a significant amount and should be disclosed and considered before making any offer.
An Appraisal is done by a professional who assesses the property and compares it to recent sales of comparable properties, lenders will often require an appraisal to verify that the property is worth the price that is being paid before lending against it.
A home inspection is done by a professional who inspects the home to make sure there are no surprises or extra maintenance required on the property before you complete your purchase.
Lenders will often require you to have insurance in place on your home in the event of unforeseen emergencies or disasters so that they are protected as well as you in case of emergency should something ever happen to your home.
There is also mortgage insurance, life insurance, and disability insurance which all deserves a deeper conversation as taking on a mortgage is a big obligation and depending on your life stage and situation these can be invaluable should the unforeseen happen.
This one might seem obvious but don’t underestimate the cost of moving, and if this is your first home purchase and you have all this room to furnish there may be a few IKEA trips in your future.
Hopefully the above list hasn’t scared you off of home ownership as it really isn’t as daunting as it might seem! All it takes is having a plan in place, give me a call at 604-832-2849 or send me an email @ email@example.com and we can start working on your home ownership dream and turn it into a reality.