The “Hidden” Costs of Buying a Home
By Darren Sharko
When you’re buying a home scraping together enough for the down payment will take the biggest chunk out of your savings. Typically your regular mortgage payments will represent your greatest ongoing expense. Make sure, however, that you set aside enough money to cover the “hidden” costs associated with any home purchase.
These costs aren’t exactly a secret, but they can add up and take you by surprise, especially if you’re a first-time homebuyer. Among the extra costs associated with buying a new home are the following:
Inspection Fee: If you’re purchasing a resale home, you may want to consider a professional building inspector to give the home the once-over before you finalize your offer to purchase.
Mortgage Application Fee: Some lenders charge this to process your application and each time your mortgage is renewed.
Property Valuation Fee: Your financial institution may do a property valuation to ensure that the property meets the criteria for a mortgage.
Legal Fees: You’ll need a lawyer to handle some of the paper work.
Closing Costs: Any amount that the seller has prepaid – such as property and school taxes, condo maintenance fees, and utility fees – will be adjusted so that the buyer pays the excess amount back to the seller.
There are also moving costs, property insurance (which might cost more than your previous residence,) a property survey, a new home warranty fee if you’re buying a new construction, or default insurance premiums (for low down or no down payment mortgages.)
For a resale home, the “hidden” costs can amount to 1.5% to 2% of the purchase price. For a new home, that figure can rise to 2.5%. A $300,000 home, for instance, could easily mean $4,500 - $7,500 in additional costs. That doesn’t even include the cost of cancelling and reconnecting your utilities, or items like new appliances, furniture, carpets or curtains, which you also might need for your home.
So tally up the extras, and factor them into your home budget. A little planning will help you remain in a comfortable financial position as long as you own your home.
For more information, tips on buying, or mortgage calculators, visit:
or call Darren Sharko, your RBC Mortgage Specialist, at (780) 441 – 9998, or email him at email@example.com.