The Truth About The Costs Of Buying A Home

You’ve decided now is the time to pull the trigger and buy your first home. You just can’t wait to make your dream home your own. Well the truth is most people underestimate the cost of buying a home. It is wise to understand these costs to avoid unnecessary surprises on closing.

Here’s a list of what you need to plan for:

Costs of doing a Home Inspection – It’s a good idea to have a home inspection done prior to putting an offer in on a home. If the seller has not done this prior to listing, you may want to do one. It will cost you anywhere between $300 and $500.
A deposit with your offer to purchase – When you put an offer in to purchase a home you are required to include a deposit with the offer. This money will go against your downpayment when you close on the home. Please remember you need to have the funds available at time of offer. The amount of the deposit will vary but plan for for about 5% of the purchase price for a deposit.
Mortgage Appraisal Costs – Your lender will likely want to do an appraisal of the home prior to finalizing your mortgage. There is typically a cost associated with the appraisal. Ask your lender to outline these costs for you.
Downpayment – Your lender will require you have some skin in the game and include a down payment on your property. You will need 20% of the purchase price down to qualify for a conventional mortgage.
Land Transfer Tax –It’s a one time tax that you pay on closing a home. The amount is dependant on the purchase price and the location of your home. Homes in Toronto have the highest land transfer tax as you are paying an additional tax to the City of Toronto.
House Insurance – Your lender will require you have this in place before you close.
Moving Costs – There are lots of options for moving- everything from renting a truck and moving yourselves, to having a mover pack, unpack and move your belongings. Get more than one quote and look for references when selecting your movers. Quality of move is as important as cost.
Legal Fees –Your lawyer will be responsible for the closing of the transaction, ensuring that title of the property is clear and you are getting what you contracted for. These fees will run anywhere from $800-$1500. Best to deal with a lawyer that does real estate for the best value and service.
Other Closing Costs – The lawyers will charge you for any utilities or taxes that the seller paid in advance. This will be included in their bill on closing.