| by Arley Kirby | No comments

Real Cost Of Buying A Home

Pre-Closing Costs

  • Home Inspection. Getting a professional home inspector is always a smart decision. Things heating, electrical, and plumbing problems aren’t always obvious to untrained eyes. A qualified home inspector is there to help uncover any problems that could create quite a financial burden to buyers.
  • Appraisal. More and more mortgage lenders are asking for home appraisals prior to closing. Before they agree to lend you the money to purchase a home, lenders are just making sure that you haven’t paid too much for a property. An appraisal gives the lender another opinion about your potential new home and gives them the peace of mind that the value matches the price you have agreed to pay.

Closing Costs

  • Land Transfer Tax. In Ontario, buyers are required to pay up to 2% of the purchase price of a home as a tax. In the City of Toronto, there are additional taxes on top of that. These can be significant amounts given the price of housing. First time home buyers are eligible for tax refunds but it is always wise to talk to your real estate professional regarding this significant cost.
  • Mortgage Insurance. If you cannot afford to put down 20% of the purchase price down on your home, you will probably be required to by mortgage insurance. This will be for the benefit of your mortgage lender in the event that you cannot pay your mortgage. Rates will vary so it is always best to shop around.
  • Legal Fees. Buying a home is a complicated contract that involves lots of forms, documents, and ultimately legal advice. Your real estate lawyer will do all the heavy lifting, title search, registering your mortgage and deed, as well as producing a Statement of Adjustments.
  • Title Insurance. This type of insurance is for the benefit of the buyer. It ensures against such things as title fraud, errors in public records, any encroachments with neighbours, and many more. This should be discussed with your lawyer but is definitely worth the investment.
  • Adjustments. As mentioned earlier, your lawyer will prepare a statement of adjustments. This basically will outline who owes what between the buyer and the seller. For example, if the yearly property tax was paid by the seller at the beginning of the year, and the buyer purchases the home half way through the year, the buyer would be responsible for paying half of the property tax.