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(NC)-Purchasing a home can be a stressful
experience for anyone, but especially for first-time buyers who may
not be aware that there are a host of costs associated with buying a
home other than the actual purchase price and real estate
commissions. It helps to know what those costs are in advance rather
than get an unexpected surprise at closing and add to an already
stressful experience.
Many of the costs are a factor of the purchase
price, the value of the home and/or the amount of financing you are
obtaining.
Closing costs. These generally refer to legal
fees, property tax and utility adjustment costs and, in some
provinces, land transfer taxes.
Legal costs go to cover lawyer (notary in
Quebec) fees and legal transactions such as reviewing the terms of
the offer, preparing and signing a mortgage, conducting a title
search on the property, registering a new title, obtaining relevant
documentation and determining appropriate adjustment costs.
You should consider hiring a real estate lawyer
to handle your transaction. If you don't have or know of a lawyer,
your best referral source is family or friends, or through the law
society in your area.
Land transfer tax. In some provinces this tax
is levied when property changes hands. It varies with the purchase
price of the property.
Other costs. Costs other than closing costs can
include but are not limited to the following:
Property Survey. This is undertaken to verify
the location of property's boundaries, measurements and structures
and identify any easements, rights of way or encroachments on your,
or adjacent properties. Title insurance is often an alternative to a
property survey.
Interest Adjustments. This covers any interest
accrued between the closing date of the purchase and the first
regular payment date of the mortgage.
Goods and Services and Sales Taxes. GST and
sales taxes will depend on the type of property being purchased.
Always ask if either or both of these taxes apply before signing an
offer to purchase.
Service Charges. These are charges to hook up
utilities such as electricity, gas, and telephone service.
Home Inspection. It can be a good idea to have
an inspection done before completing the purchase to evaluate the
structural and mechanical condition of the property. This could save
you lots of money in future repairs.
Appraisal fees. Some purchasers want to ensure
they are paying a reasonable market price for the home they are
purchasing. You may want to condition your offer subject to a
satisfactory appraisal by a member of the Appraisal Institute of
Canada.
Mortgage Life Insurance. Special insurance
coverage to cover the cost of discharging your mortgage in the event
of death or severe illness is available from most lenders.
Moving costs. Although it may sound obvious,
purchasers may not consider moving as a cost of buying a home.
Moving costs will depend on the distance of the move and the amount
of furniture and goods to be transported. Get several movers in to
give you an estimate before choosing one.
Appliances. Check to see whether appliances are
included in the purchase agreement. If not, you will need to go out
and buy them.
Landscaping, Fencing, Decks, etc. If purchasing
a newly constructed home, keep in mind that there will likely be a
need to landscape and fence the yard in the first year or two.
Annual maintenance. Homes like other
possessions require care and maintenance to maintain their value.
You need to plan for future painting, and replacement of any needed
items like roof shingles, appliances, furnaces, depending on the age
of the home you are buying.
Additional information is available from
Genworth Financial Canada (formerly GE Mortgage Insurance Canada) at
http://www.genworth.ca.
- News Canada
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