WE MONEY - Costs involved when buying your home

Buying a home is typically one of the largest purchases and investments the majority of us will make in our lifetime, and unquestionably there are countless issues surrounding the acquisition of Real Estate. Understandably, we approach it with much uncertainty and hesitation as there are many intimidating elements pertinent to the purchase, not the least of which is the common question of, “What costs should I expect when buying my home?” Fortunately, today’s Realtor is well educated and trained to advise and inform clients on all issues relevant to facilitating a smooth successful transaction, including closing costs.

Closing costs are merely a list of charges payable upon the closing of your new home, nothing to be unsettled by. Here now is a list and brief explanation of major charges to be aware of before you get possession of your new home.

A purchase price of $275 000 is assumed, and of course some charges will increase or decrease depending on property cost.Legal costs vary from $650 to $1200, a lawyer will charge a fee for their professional services involved in drafting the title deed, preparing the mortgage, calculating and collecting closing costs, and conducting various searches. Disbursements are out-of-pocket expenses incurred, such as registrations, searches, supplies, etc. in preparing your closing.

A Mortgage insurance premium of $9800, payable to the Canada Mortgage and Insurance Corporation or Genworth to insure your mortgage against default. This cost can be avoided by applying a downpayment of at least 20%, or can be paid by combining it with the amount borrowed and paid over time. The CMHC application fee is $165.

A Land Transfer Tax of $2600 is payable to the province, first time homebuyers however, get a partial rebate. Also, note that as of January 1st 2008, the City of Toronto will begin charging an additional transfer tax, so if you’re considering buying in Toronto, now would be a good time!
Closing Adjustments are charges for bills that the seller has prepaid such as property taxes, utility bills, and other charges.

GST is not applicable on resale homes but on the purchase of a newly constructed home. Make sure you know who pays this, you or the builder. As well, this tax is charged on all professional fees.

Other costs to be mindful of include home inspections $300 +, Title Insurance $250 - $400, home and fire insurance $500 yr, Estoppel certificate in case of condos $100, and appraisal fee $300.These also don’t include other expenditures like cable, phone set-up fees, hydro new-account fees, or your moving expense. This is why I would recommend having at least 2 – 2.5% available to cover closing costs.Coincidentally, the value of home-ownership is priceless.