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Top Ten Closing Costs for Your Home

November 8, 2012

As a first time home buyer working with MonsterMortgage.ca, you will have access to multiple lenders and banks competing for your business.

First time home buyers often demand access to the best interst rates, terms and conditions; MonsterMortgage.ca provides that.

What often goes unnoticed are the little details in your first time home buyer experience…

Often times banks may neglect to go the extra mile to help make your first time home buyer purchase a simpler one. MonsterMortgage.ca would like to make your first time home buyer experience just a little easier with today’s top ten; the Top 10 Closing Costs When Buying a Home.

Use these tips, so as a first time home buyer, you can avoid being blindsided by these often forgotten costs – don’t count on your banker to tell you to watch out for…

Number 10 – Moving-in costs

Watch out first time home buyer! – prepare a budget for all those last minute things:
– $100 or more to rent a van
– Up to $700 for professional movers,
– $50 to $60 for a locksmith to rekey your locks,
– Up to$100 cleaning supplies

Even these little things can add up to $1000! – a large amount when you’re not expecting it.

Number 9 – Title Insurance

Title insurance will safeguard you, the first time home buyer, against fraud and problems with your property title or survey. Title Insurance fees range from $150 to $350.

Number 8 – Tax on Mortgage Insurance

If you have less than a 20% down payment, your lender will require that you obtain mortgage default insurance. You can roll the cost into your mortgage payments, but the PST is due at closing. For example, if your mortgage insurance is $5,000 and the PST is 8%, you’ll pay $400.

Number 7 – Prepaid Costs

If the seller has paid property taxes, water bills, or utilities in advance, you’ll need to reimburse these at closing. This can add hundreds to the upfront costs of being a first time home buyer, but this also means that these bills will be paid for your first month in your new home.

Number 6 – Costs For Newly Constructed Homes

If you’ve selected a brand-new home as a first time home buyer, be prepared to settle any items not quoted in the original price. Items not settled in the original cost of the new home include upgrades or paving and landscaping fees. New homes are also subject to 5% GST or 13% HST, although this is often included in your purchase price. A federal rebate reduces the GST or the federal part of the HST to about 3.5% for homes valued at $350,000 or less.

You’re already in the minority of first time home buyers who know about this federal rebate; don’t be one of the many first time home buyers who waste this valuable tax rebate!

Number 5 – Home/Fire Insurance

Your lender will require proof that the property is insured in case of fire and other damage. Insurance costs vary, depending on the coverage needed, but the first time home buyer should budget for at least $500 a year.

Number 4 – Home Inspection

As a first time home buyer, you want to be sure your dream home is up to the standards you deserve it to be. An inspection can help make you aware of issues related to a house’s structure and systems, such as plumbing and electrical, and recommended or necessary repairs. Fees for a home inspection range from about $350 to $450.

Number 3 – Legal Fees

A lawyer or notary will help protect your interests as a first time home buyer by reviewing your purchase agreement, searching the property title, and ensuring that all documents are completed properly. Basic legal fees start between $500 and $800, plus disbursements, with added services as needed.

Number 2 – Appraisal Fee

Your lender may ask you to have a home appraised to confirm its market value. Fees vary depending on a property’s value and complexity, but appraisal fees are typically around $400.

Number 1 – Land Transfer Tax

When a home changes hands, many provinces and a few municipalities charge a property transfer tax or title transfer fee. Rates are usually on a scale of 0.5% to 2% of the home’s value and can add thousands to your purchase price. First-time homebuyers qualify for rebates or exemptions in some provinces. In Ontario, this rebate can be valued up to $2000 dollars! Don’t throw thousands away!

While these tips largely apply to the first time home buyer, even the veteran home buyer may forget about these expenses too!

If you have any questions, certainly feel free to leave a comment below, or contact us at info@monstermortgage.ca!