What Are Closing Costs?
When buying a home, it is very common for buyers to underestimate the ACTUAL cost of buying.
Before looking at buying a residential resale home, you should meet with a mortgage professional to ensure you not only qualify to purchase a home, but that you have the financial resources to provide a down payment AND all the other costs associated with buying.
In addition to the mortgage you will be undertaking, there are always additional costs to keep in mind. The amount of these costs can differ from home to home depending on your unique requirements.
Once you know how much you qualify for it’s time to discuss the process and the other costs that you will be looking at during the home buying process.
Before we begin our home search, the first thing we want to address is the DEPOSIT - Many times home buyers confuse the deposit with the down payment and don’t realize that the “deposit” is usually just a small portion of your down payment. The “deposit” money is typically provided upon acceptance of an offer by all parties as a sign of “good faith”. This money must be “readily available” and must be provided within 24hrs after acceptance of an offer. Therefore, if your deposit money is tied up in RRSP’s or Investments, it is a good idea to “free up” this money ahead of time.
The next financial matter usually comes along with doing a home inspection. If an agreement of purchase and sale contains a provision for the buyer to do a home inspection, it will be the buyer that is responsible for hiring and paying the home inspector. Home Inspection fees can vary and range from about $300 and up depending on the size and nature of the home.
If you are purchasing a condominium, you may also be required to pay for a Status Certificate which typically costs $100. This is required when buying a condo so that your lawyer can protect you by ensuring that the by-laws, status and financial situation of the Condominium Corporation are all satisfactory to you.
Some other costs you will experience are, but are not limited to:
So as you can see, there is more homework to do than just finding the right house. It’s always a good idea to investigate what all your costs are to ensure you have no unpleasant surprises at the time of closing. And, by doing a proper budget, you can buy your next home with the comfort of knowing exactly what your monthly expenses will be.
For more information, contact your local Realtors, Kim and Dennis Downey.