5 Costs To Consider When Buying A Home
Source: Love & Specs
There’s nothing quite like the excitement of buying your first home. However, many first-time homebuyers are surprised to find out how much they have to spend in addition to their down payment. There are several additional costs associated with buying a home that can tip you over budget if you’re not aware of them. Here are five costs to consider before you make your first offer!
1. Down Payment
If you’re ready to put renting behind you and buy your first home, a great first step is to save up for a down payment. A down payment is the amount of money you put towards the purchase of a home. The minimum amount you need for your down payment is usually a percentage of the purchase price of the home and is determined by the type of mortgage you choose. Your mortgage then covers the rest of the cost of the home.
2. Deposit
Once your offer is accepted by the seller, it is important to have your deposit funds readily available. This amount is usually negotiated between the seller and buyer, however the standard deposit for a home purchase in Ontario is 5% of the offer price. The funds will likely be held by the statutory real estate trust account of the seller's brokerage until closing. This deposit will go towards your down payment.
3. Closing Costs
Closing costs are one-time fees that homebuyers must pay when purchasing a property in Ontario. Trying to get the best mortgage rate is an important task when buying a house, but it is equally important to know your real estate lawyer’s fees, the cost of land transfer taxes, title insurance and other administrative fees. Typically, it is recommended that buyers be prepared to pay between 1.5% and 4% of the purchase price on these costs.
4. Appraisal
A home appraisal is an independent, third-party, unbiased professional’s assessment of a property’s fair market value. It is performed to certify the lender of the resale value of the home in the case you default on your mortgage. The cost of a home appraisal in Ontario ranges from $350 to $750. Check with your mortgage broker, as this cost is often covered by your lender.
5. Inspections
Buying a house can be an extremely exciting time, but before you sign the paperwork, you may want to have a home inspection done. Looks can be deceiving, and what’s behind the walls may end up being a costly mess down the road. A home inspection can provide valuable information about your potential new home, the condition it is in and any potential problems. A general home inspection cost in Ontario is anywhere from $300 to $600.
Are you ready to buy your first home? Contact us to see how we can help!