Once you have figured out the home price range you can afford and the type of mortgage you qualify for, you will need to calculate all of the associated costs of the transaction to make sure you are financially ready.
Closing and Up-Front Costs
Richard will hep you plan ahead to cover the many up-front costs of buying a home. Timing is important to help make sure things go smoothly.
Closing Cost-Mortgage Loan Insurance Premium. NOTE: This is included in your Monthey payments and only comes into affect if your mortgage is a high ratio mortgage (less than 20% down payment), you may need mortgage loan insurance. To get this insurance, you will be asked to pay the required insurance premium. Your lender may add the mortgage insurance premium to your mortgage or ask you to pay it in full upon closing.
Closing Cost-Appraisal Fee. NOTE: This cost can be included in your Mortgage. Your mortgage lender may require that the property be appraised at your expense. An appraisal is an estimate of the value of the home. The cost is usually between $250 and $350 and must be paid when you contract for those services.
Upfront Cost- Deposit. This is part of your down payment and must be paid when you make an Offer to Purchase. The cost varies depending on the area, but it may be up to 5% of the purchase price. If you wish to make a down payment of 5% and you give a deposit of 5%, then your down payment is considered to be made.
Closing Cost- Down Payment. At least 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.
Upfront Cost -Home Inspection Fee. NOTE: This is not mandatory but is a good idea. Remember that I shall include this as condition of your Offer to Purchase if you choose. A home inspection is a report on the condition of the home and generally ranges around $500, 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 or urea-formaldehyde are suspected.
Closing Cost -Land Transfer Tax (sometimes called a Land Registration Fee, Deed Registration Fee, Tariff or Property Purchases Tax).You have to pay this provincial and (If buying in Torotnto) municipal charge upon closing in some provinces. The cost is a percentage of the property's purchase price and may vary. Check with your lawyer/notary to see what the current rates are. Contact Richard to discuss Land Transfer Tax Rebates that can save thousands.
Closing Cost- Prepaid Property Taxes and/or Utility Bills. To reimburse the vendor for pre-paid costs such as property taxes, filling the oil tank, etc.
Upfront Cost -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.
Optional Upfront Cost-Survey or Certificate of Location Cost. NOTE: The Seller usually provides the survey at their cost and often it is not need with lenders if you buy Title Insurance. Although the mortgage lender may ask for an up-to-date survey or certificate of location 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. Talk to Richard for further details if a survey is available.
Optional Upfront Cost-Primarily for Out of City Property Water Quality Inspection. If the home has a well, you will want to have the quality of the water tested to ensure that the water supply is adequate and the water is potable. You can negotiate these costs with the vendor and list them in your Offer to Purchase.
Mandatory Closing Cost-Legal Fees and Disbursements. NOTE: For the most part this is included in the Purchase Price. If not it must be paid upon closing and cost a minimum of $500 (plus GST/HST).Your lawyer/notary will also bill you direct costs to check on the legal status of your property.
Optional-Title Insurance.NOTE: This is not very costly but can save you signicant dollars. Your lender or lawyer/notary may suggest title insurance to cover loss caused by defects of title to the property. Approximately $250-$400
