What costs and expenses are incurred when you buy a home?
Buying your dream home is a marathon. There are so many costs involved that it can easily overwhelm you. Some of these costs are one time and some are recurring monthly or annual expenses. You should ensure that you are financially prepared to handle these costs to purchase your home.
There are some incentives and benefits for the first-time home buyer, however, these differ for every individual. We hope this list will help you prepare for the upcoming costs in your home buying process.
Down payment: This is one of the most common expenses that you save for. As a rule of thumb, the more you put down, the better are your chances to get mortgage approval from the lenders. In some cases, you can put as low as 5% down payment and rest will be loaned by the bank, however, you will need to prove your income to support the loan. On the other hand, if the house purchase price is over a $1000,000, the minimum down payment is 20%
Mortgage insurance cost: As mandated by Canadian Mortgage Housing Corporation of Canada, you are required to buy a mortgage insurance if you are paying less than 20% down payment. This cost depends on the home value and the down payment. You can use this calculator to get an estimate of the CMHC mortgage insurance you will need to purchase https://www.cmhc-schl.gc.ca/consumers/home-buying/calculators/mortgage-calculator
Inspection cost: Before you purchase a house, it is highly recommended to engage a professional property inspector to inspect the home. An inspector plays a critical role in insuring one of the largest purchases of your lifetime. A timely inspection can help you save thousands of dollars apart from the stress and agony caused by learning about sudden expenses.
Appraisal cost: Your lender may want to appraise the property before approving your mortgage loan. This cost is paid by the purchaser.
Home insurance: When you buy a house, it is imperative to insure the purchase. In fact, a lender may not grant the loan without home insurance. This insurance covers the home against damage caused by natural disasters like earthquakes, fire and storm. There are a lot of different insurance packages available based on your needs.
Legal cost: This expense is to cover the legal costs of transferring the home to the purchaser’s name. This cost is usually from $1500-$3000 depending on residential properties.
Property Transfer Tax: There is a property tax for every purchase unless exempted for first time home buyers if you meet the criteria. Please use this calculator for your property transfer tax obligation.
Renovation cost: When you buy your home, it might need some repairs and changes based on your needs and preferences. Usually new light fixtures, air filters, locks and keys, furniture, and appliance repairs. It is best to budget for these expenses.
The list is long however if you can manage these costs and budget for them in advance, your home purchase is going to be less stressful. For any help required with your real estate purchase, you can contact Sukhraj Manchanda, Surrey Realtor.