Expenses to Consider
When calculating the amount of
money you have to buy a home, don't forget to consider
all the additional costs and expenses that go
along with the initial purchase. Some costs may be a one-time
fee, while others will be recurring; however, not all costs apply
to all home buyers. Home
purchasing costs may include:
Appraisal: The institution that lends you the
money to buy your home may require a property appraisal to ensure
that the money they are giving you is no more than what you need.
The appraisal itself may be unnecessary if you mortgage loan is
Lawyer fees: Every home purchase requires a
lawyer. Lawyers are required to write up and review mortgage documents,
search for the tile, review the purchase offer and ensure a proper
closing. Lawyer fees vary according to the location and complexity
of the sale. Your real estate agent will be able to provide you
with the most economically sound method of employing the services
of a lawyer.
Home inspection: After an Offer to Purchase
has been made, you will have to hire a home inspector to ensure
that the establishment is up to government standard. Depending
on where you are, inspectors may be independently regulated, and
as such are not bound by any regulatory board. An average home
inspection will cost anywhere from $100 to $400, depending on
the size and age of the home.
Land transfer tax: In most locations it is
mandatory that the new home purchaser pay tax on the property
being purchased. Again, this will vary according to location but
should be no more than 5% of property's value.
Loan Insurance Fees: If your loan is worth
75% or more the home's value and you have less than a 5% down
payment, you may be required to assume mortgage loan insurance
(this will be decided by the lender at the time of the loan).
The insurance should cost not more than 4% of the loan's value
and can be included in your monthly mortgage payment.
Mortgage Broker: If you employ the services
of a mortgage broker, they may charge a fee for finding you a
lender. If this is the case, the broker fee will more than likely
be a percentage of the loan itself.
Moving Costs: You may require the services
of a moving company, and as such must take these costs into consideration.
A typical moving company will charge anywhere from $30 to $100
an hour for their employees and moving van, depending on the size
of the van and the number of employees needed. Keep in mind that
it will be cheaper for you if you pack the goods yourself and
only hire the moving company to load, transport and unload the
goods. Another idea is to rent a moving van yourself; this costs
approximately $100 - $200, a day.
Property Tax: Homeowners must pay their governmental
property tax. This payment can either be paid through the city
you live in, or may be added on to your monthly mortgage payment.
Property Insurance: When purchasing a home
it is always a good idea to get property insurance. This insurance
will cover your home and everything in it, in the event of a fire,
flood, natural disaster or break in. This insurance can be purchased
through most major banks as well as independent insurance companies.
Realtor Fees: If you chose to hire your own
realtor, you will be expected to pay him or her 'out of pocket'.
Prices vary widely from location to location, but is usually a
percentage based on the purchase price of the home.
Survey Fee: Prior to your Offer to Purchase,
your lender will ask that you produce a survey of the land. Such
survey's can be obtained through your local housing board or can
be done by a certified surveyor. It is possible that the seller
may offer a survey following purchase, though you can include
a survey request as a part of the Offer to Purchase.
Tax: Depending on where you live, you will
be required to pay tax on the purchase of your new home. This
tax varies according to location and can be anywhere upwards of
4% of the purchase price; the more expensive the home, the more
taxes you will have to pay.