Many first time buyers overlook or don't understand the concept of closing costs. Your Guelph real estate agent or mortgage specialist may not inform you of how much closing costs can affect your budget. To put it in simple terms, closing costs can be a variety of different expenses outside of the price of the home itself. They are usually brought upon by the buyer or seller and have very little to do with agents or brokers.
Experts suggest closing costs for average buyers will represent 3% to 4% of the purchase price, though this will vary depending on which city or province your home is in. The first group of costs buyers should anticipate involve mortgages. If you've put a down payment of less than a 20% on your Markham real estate, yours is considered a high ratio mortgage. This means that you'll have to pay both a high ratio mortgage application fee to your mortgage insurer, as well as insurance against default which can total between 1% to 3.25% of your purchase price. These fees depend solely on the size of your down payment, so not everyone should anticipate these.
Most Toronto Real Estate Agents will tell you that inspection fees are the most common closing costs home buyers incur. Mortgage lenders will require a professional home appraisal and inspection, as well as a land survey before lending. In addition to these, buyers will also have to pay legal fees to any lawyers or notaries who assisted in the drafting of documents such as mortgage and title.
New Corktown Toronto home owners can expect to pay GST on recently constructed properties, as well as PST, or what is more often referred to as Land Transfer Tax. Both are calculated as a percentage of the purchase price. They should also prepare to insure their home, as lenders want their investment protected against fire and other natural disasters, as do you.
In addition to the costs that come with purchasing the property, owners should budget for the costs of moving in as well. Unless you're planning to walk your fridge down the stairs of the Liberty Village condos alone, you'll have to pay for movers, rent a truck yourself, or at the very least buy a case of beer for your buddies. Plan also for any utilities installation or hook up, as well as the monthly costs for utilities against your budget and how it might effect your mortgage payments.
The worst thing new home owners can do to themselves is budget unprepared. Improper planning can not only have a negative effect on your pocket book, but also your credit score, so it's imperative to do your homework before you begin. |