Other Costs of Buying a Home | Diamond & Diamond Real Estate Lawyers

Other Costs of Buying a Home

Additional Costs of Buying a Home That You Should Be Aware Of

Many fees may surround the process of purchasing a home, and it’s valuable to know the other costs of buying a home in advance so that you are fully prepared when you identify your dream home.

Most people are familiar with some of the basic costs of buying a home, such as paying for any inspections or the closing costs.

In addition to the standard closing costs associated with the property, there may be additional costs of buying a home assessed to you, the purchaser, when you buy your new condo or home.

Every one of these fees is dependent on numerous factors, including whether the seller had pre-paid anything for the year that you may need to reimburse that individual for, how the mortgage financing is structured and whether or not it is a new home.

Appraisal Fee

If you are eligible to put down 20% or more towards the purchase price, you will not be responsible for obtaining mortgage default insurance.

However, your lender may still ask for an appraisal of the property you intend to purchase. If the lender requests that you commission an appraisal on the property, they will need someone else to confirm the market value of the home to verify that it is accurate.

This is for your lender’s purposes in the event that you were to default on the home so that they have some awareness of the resale price.

Lenders may also offer you a list of appraisers they typically work with, but you may be eligible to find one yourself. An appraisal fee can cost anywhere from $150 to $500.

New Home Warranty Enrollment Fee

In the majority of provinces, special insurance providers will give warranties on new home bills and that includes all home types not just condos.

This is referred to as a new home warranty. The enrollment fee for this is usually between $500 and $1000. Also, it is very beneficial for a purchaser to consider this in any case because it protects you from having to pay for any repairs that may have been associated with builder error.

You will have to pay for this one of two primary ways: through the purchase price in your mortgage or with cash up front.

Some builders may include such fee in the asking price, but others will not, so it is important to have your attorney review these documents in full well in advance. Make sure you understand what you are responsible for and whether or not it is included before you buy, so you can calculate these extra closing costs.

Hookup Fees

It is essential to have your utilities hooked up and turned on prior to your moving day. These include:

  • Hydro
  • Cable and internet
  • Oil
  • Gas
  • Electricity

Some of these come with various hookup fees, so it is a good idea to set aside a couple of hundred dollars to ensure that you are not surprised by the first bills.

Land Survey Fee

Your lender may request that you obtain an up to date land survey. This process involves a surveyor visiting the property, measuring the land and ensuring that all of boundary lines are being appropriately represented.

A seller will typically commission this survey prior to listing the home and pay the fee, which is usually between $600 and $900. In the event that the seller doesn’t do this, however, and your lender demands this information, you may be responsible for the bill.

Prepaid Condo Fees

If the seller has prepaid their condo maintenance fees for the year, you will need to reimburse them for the pro-rated amount from the day you take possession.

This would typically be outlined in your statement of adjustments.

Prepaid Utilities

If a seller is ahead on payments for hydro, oil, water or gas, you will also be responsible for the reimbursing them for that in a pro-rated fashion.

This should be outlined in your statement of adjustments.

Prepaid Property Taxes

Homeowners across Canada are responsible for paying property taxes. They may be paid quarterly, monthly, twice a year or even annually.

In the event that the seller of a home has prepaid their property tax for the whole year, you will be responsible for reimbursing them for a prepaid amount from the day of the closing to the date they have paid up to.

Having a sit-down meeting with your experienced real estate lawyer can help advise you on the various things you will be responsible for in the closing process so that you can create a comprehensive budget.

Identifying a real estate attorney early on in the process is the best way to be completely clear about what you are responsible for, and to take all the necessary steps to protect yourself and prepare yourself.

Being caught with the other costs of buying a home on the big day can damper the excitement of your purchase. So, make sure you are clear about everything you are responsible for well in advance.

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