13 Extra Costs to be Aware of Before Buying a Home
"The last thing you need are unbudgeted financial obligations cropping up hours before you take possession of your new home."
Whether you're looking to buy your first home or trading up to a larger one, there are extra costs on top of the purchase price that you must take in account. These additional fees, such as taxes and conveyancing, could surprise you with an unwanted financial nightmare on closing day. Stay informed and prepared!
Some costs are one-time fixed fees, while others could represent an ongoing monthly or yearly commitment. Not all of these costs will apply in every situation, however it is better to be aware of them ahead of time so you can budget properly.
Remember, buying a home is a major milestone. Whether it's your first, second or tenth home, there are lots of important details to consider while the buying process moves forward. The last thing you need is unplanned and unbudgeted financial obligations cropping up hours before you take possession of your new home.
Read through the following checklist to make sure you're budgeting properly for your next move.
1. Appraisal Fee
Your lending institution may request an appraisal of the property which would be your responsibility to pay for. Appraisals can vary in price from approximately $250 -$ 400. Find out from your financial institution exactly the cost and how it is going to affect you before ordering the appraisal.
2. Property Taxes
Depending on your down payment, your lending institution may decide to include your property taxes in your monthly mortgage payments. If your property taxes are not added to your monthly payments, your lending institution may require annual proof that your taxes have been paid in full.
3. Survey Fee
When the home you purchase is a resale (vs. a new home), your lending institution may ask for an updated property survey. The cost for this survey can vary. Check with them first if a survey is required and if so, the cost.
4. Property Insurance
Home insurance covers the replacement value of your home (structure and contents). Your lending institution will request proof that you are insured as it protects their investment on the loan.
5. Service Charges
Any new utility that services your hook up, such as telephone or cable, may require an installation fee. Some will bill you while others want payment up front.
6. Legal Fees
Even the simplest of home purchases should have a lawyer involved to review all paperwork. Shop around, as rates can vary greatly depending on the complexity of the issues and the experience of the lawyer.
7. Mortgage Loan Insurance Fee
Depending upon the equity in your home, some mortgages require mortgage loan insurance. This type of insurance will cost you between 0.5% -3.5% of the total amount of the mortgage. Usually payments are made monthly in addition to your mortgage and tax payment.
8. Mortgage Brokers Fee
A mortgage broker is entitled to charge you a fee in order to source a lender and organize the financing. However, it pays to shop around because many mortgage brokers will provide their services free to you by having the lending institution absorb the cost. Ask the questions to get clear answers on what costs you are absorbing.
9. Moving Costs
The cost for a professional mover can add up. Phone around for rates and ask your friends about their reputations. Costs may range:
10. Maintenance Fees
Condos charge monthly fees for common area maintenance such as grounds keeping and carpet cleaning in hallways. Costs will vary depending on the building. Make sure you know the amount of your strata fees and calculate it into your monthly household budget.
11. Water Quality and Quantity Certification
If the home you purchased is serviced by a well, you should consider having your water checked by your local experts. Depending upon where you live will determine whether or not a fee is charged to certify the quantity and quality of the water.
12. Local Improvements
If the town you live in has made local improvements (such as the addition of sewers or sidewalks), this could impact a property’s taxes by thousands of dollars. Call the City Hall and talk with the right people.
13. Property Transfer Tax
This tax is applied whenever property changes hands and the amount that is applied can vary. Your lawyer can advise you how much. |