When house hunting, overlooking closing costs is a common and costly mistake. These additional expenses, ranging from taxes to title insurance, can catch buyers off guard. It's crucial to understand these potential costs to avoid last-minute surprises and ensure a smooth closing process. While some expenses may be negotiable or waived by your broker or lender, it's wise to be prepared for what's typically required beyond your down payment.
Home Inspection:
A home inspection, typically costing between $300 to $1,000, is essential. It assesses a property's condition, potentially uncovering costly repairs post-sale. Inspectors scrutinize various aspects of the property, including plumbing, electrical, and structural integrity, aiding in negotiation if issues arise.
Deposit:
Deposit:
Deposits, typically 5% or more of the purchase price, demonstrate buyer commitment. This amount varies by location and is credited towards the home purchase, potentially reducing mortgage interest.
Appraisal Fee:
Appraisal Fee:
An appraisal, costing $275 to $500, determines a property's market value, influencing loan approval. Lenders may waive this fee but could charge financing fees.
Land Survey:
Land Survey:
Lenders may require a land survey, costing $1,000 to $2,000, to delineate property boundaries, minimizing future disputes.
Legal Fees:
Legal Fees:
Real estate lawyers or notaries, charging $900 to $2,000, handle paperwork and ensure legal compliance, location-dependent.
Land Transfer Tax:
Land Transfer Tax:
This tax, ranging from 0.5% to 2.5% of the property value, varies by jurisdiction and property price.
New Home Warranties:
New Home Warranties:
Mandatory in select provinces, warranties cover defects in new homes, with costs varying by home price.
Mortgage Default Insurance:
Mortgage Default Insurance:
Required for down payments below 20%, premiums range from 2.8% to 4% of the mortgage value, affecting borrowing costs.
Mortgage Life Insurance:
Mortgage Life Insurance:
An optional policy covering the mortgage amount, declining with payments, alternatives like term life insurance may offer more flexibility.
Title Insurance:
Title Insurance:
Protecting against title defects, costs vary by property and province, typically ranging from $200 to $500.
Home Insurance:
Home Insurance:
Mandatory for mortgage approval, costs vary based on coverage needs and property specifics.
Moving Costs:
Moving Costs:
Varied expenses include truck rental, packing services, and professional movers.
Other Expenses:
Other Expenses:
Additional costs like appliances, renovations, service fees, and ongoing maintenance should be considered. Comparing quotes and budgeting appropriately ensures a comprehensive financial plan when purchasing a home.