Closing Costs and Ongoing Costs for Home Ownership
How to estimate for closings costs and ongoing costs when you a Purchase a Home?
If you are looking to purchase a home then following information would help you to estimate the closing costs (one time) and onging costs (every month) for being a home owner. Home ownership does come with financial responsibility to maintain the home but it also gives financial stability due to home value being appreciated over time and financial security to own a home for family.
Closing One-Time Costs:If you would like to receive step by step guidance during the closing process and professional contacts to help you save, please contact us
Mortgage Default Insurance or Lender fee:
For A Lenders, High-ratio mortgages (those with less than 20% down payment) generally require mortgage default insurance and the cost is usually added to the mortgage, and ranges from 1.00% to 4.50% depending on the amount of your down payment and type of income (verified/stated) OR
For B/C Lenders, there is usually lender fee ranges from 1.00% to 5.00% of mortgage amount depending on strength/risk of application and client will have to pay the cost at time of closing.
Appraisal fee:
This is the cost for a professional to come to your property and assess its value. Your mortgage lender or mortgage default insurer may require an appraisal to determine whether the selling price is reasonable for that market and usually costs $300-$400.
Home Inspection fee:
This covers the cost of a professional inspection of your home. Hiring an inspector is voluntary but recommended for resale homes, and usually costs $400-$600.
Legal Costs and Disbursements:
This includes fees charged by your lawyer or notary for services such as conducting a title search, drafting a title deed and preparing the mortgage documents, and registration fees. This will cost around $700-$1000.
Land Title Registration:
This cover the cost to register the ownership of home and mortgage charge document on land and varies for each province. For $500,000 purchase price the cost is around $300-$400 and done by lawyer.
Interest Adjustment:
If your mortgage payment date is not same as closing date then usually lender has Interest Adjustment Date (IAD). This implies that you will need to pay the interest for mortgage between closing date to IAD which can be either requested at time of closing or taken out from your pre-authorized debit account on IAD.
Property Taxes and Utility Adjustment:
If previous owner have prepaid property taxes and utilities for entire year then at time of closing you will have to reimburse them for it. If lender is collecting property taxes on your behalf then they may also require either a property tax hold back or you to pay property tax for the remaining year. This is usually done by lawyer and will collect the adjustment cost from you.
Title Insurance:
Very often lender requires title insurance to advance funds to lawyer on closing date as land title registration usually takes longer and gets completed after closing date. There is also title insurance for owner and it is recommended to protect the owner from title theft, encroachment issues and municipal issues. Title insurance usually costs $300-$400 and can be done at lawyer office.
Property Insurance:
Since your lender has a large stake in your home, they will require you to purchase insurance against fire and weather-related damage. It is also a good idea for you to purchase 'contents' insurance to protect your valuables. You will need to get property insurance binder before visiting lawyer office for signing the documents.
Mortgage Life/Disability Insurance:
Special insurance coverage to cover the cost of your mortgage in the event of death or diability is available. Though it is optional but it is important to consider the protection for your self and family.
Moving Expenses:
Costs will vary, depending on whether you rent a truck to do it yourself or hire professional movers.
Hook-Up Expenses:
Utility/Cable/Telephone/Internet companies may charge for hooking up your services and replacing any previous owner's name with your name on the bill for your new home.
Address Change:
You will have to notify change of address to bank, credit cards, employer, investment companies, insurance companies(health care/car), school, driver license, etc. You may want to redirect mail from old address to new address for a set time period and can be done at Canada Post Office for a fee.
Home Setup and Maintenance:
Costs will vary, depending on whether you need basic furniture, appliances, window coverings, landscaping, fence, yard work equipment, security, etc
Ongoing Monthly Costs:If you would like to receive professional guidance on estimating the cost, please contact us
With current market situation and tightening of mortgage rules by Government of Canada (OSFI), we have access to 20+ big and small banks providing you the mortgage solution and flexibility that meet your personal needs. We are Mortgage Professionals to help you plan for home ownership (i.e. purchase, pre-approvals, cash back, renewals, renovations), provide step by step guidance to prepare for mortgage financing and implement personalized savings strategies to payoff mortgage sooner. There is no cost for our expert services and to seek for professional help you can CONTACT US.
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