What to Know About Closing Costs When Buying a Home
There are a lot of things to think about when you're making plans to purchase a new Calgary home but don't forget about the closing costs once you have your down payment saved. You'll need to make sure that these costs are covered as well. For the most part all of these fees need to be paid legally in order to make a home purchase so you'll have to budget them into your costs along with the initial down payment.
If you're planning on borrowing at least 75% of the purchase price of the home the lender will ask for mortgage insurance.
While this is not a necessity, getting a home inspection is one of the best things you can invest in—especially if you're looking at an older home. The inspection takes a look at the various home systems such as electrical, plumbing and heating and also makes sure that the building is structurally safe. This is a cost that will vary from one home inspector to the next so do some comparative shopping before hiring someone specific.
This needs to be done to make sure that the home is safe to move into and that all problems have been disclosed. While a home can look perfectly acceptable when you do a quick inspection of it yourself, there are other things that need to be looked at thoroughly to make sure the home is ready for a new owner. You certainly don't want to purchase a home only to find out later that it was overrun by termites!
You’ll need to use a real estate lawyer to make sure that all the paperwork is on the up and up. The fees paid to the attorney will go towards such things as a title search, handling disbursements and possibly a property survey.
This is a provincial tax and is based on the fair market value of the property. This market value is usually close to the amount that you will actually pay for the home. You may also have to put some money away to cover the HST costs on your new home as well, but you should ask your real estate agent about the current tax laws and whether you'll need to make payment on this amount in your situation.
Taxes and legal fees are going to be the big payouts at closing time. Taxes, well they are just inevitable, and the money paid to your lawyer keeps everything legal.
Most lenders will want to see proof that you have property insurance that will cover the replacement value of your home and the contents within it.
If the seller has prepaid for any utilities, property taxes or maintenance fees, you'll need to provide him with a refund.
If you're putting down less than 20% as a down payment, you'll be required to get mortgage insurance. You'll also need to purchase home insurance and you may also want to consider title insurance that protects you from survey errors and title fraud.
After closing you'll have to handle all of the moving expenses and fees from the utility companies to get you hooked up. There may also be some renovations that you’ll want to do quickly to make the home more habitable.
Don’t forget to budget for getting your utilities hooked up such as hydro and heating as well as your cable and telephone. These extra costs can certainly add up and you should call up the company ahead of time to get an estimate of how much it will cost so that you have an exact amount to work into your budget.
When you know what the closing costs are, you'll be able to deal with them more effectively. If you have any questions at all you should contact your real estate agent. He'll be able to let you know how to sort out all of these costs to arrive at a general estimate of what the final tally will be.