Buying a home is crucial. It’s a lot of work, and it’s not for everybody. Decision-making when purchasing a home is also vital, especially if you are a first-time home buyer. One wrong move and you may have your most significant asset taken away from you. Buying a home can cause you hundreds, if not millions, of dollars. Other than the purchasing cost itself, there are other costs that you have to think of.
Other costs include:
Though home inspection is optional. It is good that you inspect the house you plan to buy. You should know what part of the house needs repair. That way, you will have a more precise decision if you want that house or look for another one.
For financing purposes, you will need a property appraisal. A property appraisal will estimate the property’s value.
Property survey determines the size and shape of the property. Your lender might ask for one when you apply for a mortgage; sometimes, the seller has one that they can give you. If you need help, you can hire a professional surveyor to do the property survey.
Just make sure to hire provincially licensed surveyors to guarantee the highest work quality.
Title insurance protects you and your lender from title fraud, municipal work orders, zoning violations, and other property defects. Your lawyer may encourage you to get title insurance, which will be added to your legal bills.
Although it is not a legal requirement in Canada, your mortgage lender will still require you to get one to obtain a mortgage with them.
This insurance covers unexpected events or accidents such as fire, windstorm, or theft. Your mortgage lender will require you to get property insurance for the home’s replacement value.
On closing day, you may pay taxes and mortgage insurance. These will be the final additional costs when you buy a home.
The Final Costs include the following:
Applicable fees and taxes
Land Transfer Tax
The land transfer tax is based on the home’s purchase price, and some other factors/ Taxes will vary by province, and first-time home buyers may receive rebates for part of the cause.
You may be eligible for a rebate for some of the taxes you pay when buying a home.
Your mortgage lender will require you to get home mortgage insurance Canada if your down payment is less than 20%. It is to protect the lender from any mortgage defaults.
After the closing day, your lawyer will give you all the legal papers, and the home is yours.
Finding a home that suits your taste and budget takes work. You have to compromise either way because not the time will everything go according to your plan.
Tips before you buy a home
Preparing yourself mentally and financially before buying a home is a must. One of these preparations includes:
1. Start saving early.
If you are planning on purchasing a home, start saving years early. That way, you can save more, so you don’t have to compromise the home you want. Saving early will prepare you for other fees without being short on budget.
2. Check and strengthen your credit.
Your credit is your foundation in applying for a mortgage. If you have a good credit score and history, you can get the best deals and be able to negotiate with your mortgage lender. You can get favorable interest rates when you have a high credit score.
3. Explore mortgage options.
Different mortgage lenders have other mortgage terms and policies and offer different interest rates. So it would be best if you shop for mortgage lenders. There are better mortgage lenders if you dig deeper into the market.
4. Find out what you comfortably afford.
You should find a home that’s within your budget but make sure that you still have extra. For instance, you can afford $500,000; make sure that you still have another $500,000 in hand or depends on you. Make sure you have the extra because there are other costs you need to pay other than the purchasing amount itself.
5. Get pre-approval.
Pre-approval will estimate what you can afford in a house. It will also lock in an interest rate for how many days until you get the mortgage. But pre-approval doesn’t mean you are already approved; the mortgage lender can still deny you even with pre-approval.
Again, buying a home is something we can only decide on slowly. We should think about it before making any decision.
Buying a home is costly, as are the other costs that come with it.
Building your Canada credit score is one way to save money when purchasing a house. You’ll get low-interest rates if you have a high credit score.