The following is a list of costs that you should review to ensure there are no surprises and unnecessary stress when closing day rolls around. This list will allow you to plan ahead to cover the many up-front costs of buying a home. As a professional Realtor, my job is to help make sure things go smoothly for you to minimize and avoid any surprises.

  • Mortgage Loan Insurance Application Fee and Premium If yours is a high-ratio mortgage (less than 20% down payment), you will require mortgage loan insurance. To get this insurance, you may be asked to pay the required application fee. Your lender may add the mortgage insurance premium to your mortgage or ask you to pay it in full upon closing.



  • Deposit This is part of your down payment and must be paid when you make an Offer to Purchase. The amount varies depending on the value of the home you are buying. This has to be given to the Seller's Realtor within 24 hours of acceptance of your offer.
  • Down Payment A minimum of 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.
  • Status Certificate Fee This applies if you are buying a condominium and costs up to $100.
  • Home Inspection Fee Remember that this may be a condition of your offer to Purchase. A home inspection is a report on the condition of the home and may cost over $375, depending on the complexities of the inspection. For example, it may be more costly to inspect a home that has large square footage, one that is expensive or one where contaminants such as pyrite, radon gas, vermiculite, zonolite or urea-formaldehyde are suspected.
  • Land Transfer Tax You will have to pay both provincial and municipal Land Transfer Taxes upon closing. The cost is a percentage of the property's purchase price. First time buyers are eligible for rebates (some restrictions apply). Ask me for more details.
  • Prepaid Property Taxes and/or Utility Bill To reimburse the vendor for pre-paid costs such as property taxes, filling the oil tank, etc.
  • Property Insurance. The mortgage lender requires this because the home is security for the mortgage. This insurance covers the cost of replacing the structure of your home and its contents. Property insurance must be in place on closing day.
  • Survey The mortgage lender may ask for an up-to-date survey 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. It can cost in the $1,000 to $2,000 range.
  • Water Quality Inspection/Septic Inspection. If the home has a well and septic system, you will want to have the well tested for quality of the water, water supply is adequate and the water is potable as a condition of your offer. The septic should be tested for leaks and overall condition. You can negotiate these costs with the vendor and list them in your Offer to Purchase.
  • Legal Fees and Disbursements Must be paid upon closing and cost a minimum of $1000 (plus GST/PST).Your lawyey will also bill you direct costs to check on the legal status of your property.
  • Title Insurance Your lender or lawyer may suggest title insurance to cover loss caused by defects of title to the property.

NOTE* If you feel you cannot cover all of the up-front costs, you can ask your lender for a loan. Remember that payment for this loan amount, based on a 12-month repayment period, will have to be included in your Total Debt Service ratio calculation.

OTHER COSTS

Besides up-front costs, there are other expenses to consider:

  • Appliances - Check to see what comes with the house, if anything.
  • Gardening equipment.
  • Snow-clearing equipment.
  • Window coverings, especially if for a new condominium.
  • Decorating materials such as paint, wallpaper, flooring and tools for redecorating.
  • Hand tools. You will need some basic hand tools for your new home.
  • Dehumidifier. May be required to control moisture levels, especially in older homes.
  • Moving Expenses.
  • Renovations or Repairs.
  • Service Hook-Up Fees. Charged for utilities. You may be required to pay a deposit for utilities such as telephone and heating services.
  • Condominium Fees. You will have to pay for the first and last month.


REMEMBER YOUR CLOSING COSTS

You've bought a home. The financing is done; the inspections were acceptable and now the deal is firm.

Closing costs is an area that buyers frequently get into trouble when they are not made aware of the expenses related to buying a home by their agent. Don't get caught off guard! Especially if you are not a resident of Canada.



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