Surprise! Whether you're a first time home buyer or not, there are many costs on top of the purchase price.
"The last thing you want are financial obligations that are unaccounted for cropping up just hours before you take possession of your new home..."
Whether you're a first time home buyer or not, there are many costs on top of the purchase price. There are extra fees, and taxes, such as Property Purchase Tax, that could surprise you with unwanted financial nightmares on closing day.
Some costs are a one -time thing, while others can be monthly or yearly commitments. Not all of these costs will apply in every home buyer's situation, however it is better to know about them ahead of time so you can budget properly.
The following is our checklist to ensure you have budgeted properly for your home purchase:
1. Appraisal Fee
Your lending institution, or mortgage broker, may request an appraisal of the property which could be your responsibility to pay for. Some appraisals can vary in price from approximately $300-$400. We work with a Mortgage Consultant who waives this cost for our buyers.
2. Property Taxes
Depending on your lending institution, they may decide to include your property taxes in your monthly mortgage payments and if not you need to come up with your portion of the property taxes upon completion at the lawyer’s office.
3. Survey Fee
Your lending institution may ask for a property site survey. The cost for this survey can vary between $25-$300 depending on where it is coming from. The owner may have one that can be included in the offer, or the municipality may have one on file. Title insurance can replace the site survey, if need be, at a cost of approximately $300-$500.
4. Property Insurance
Home insurance covers the replacement value of your home (structure and contents) and must be at least the amount of your mortgage. Your insurance company can help you determine the amount of coverage needed. The lending institution will request proof (the insurance binder) that you are insured, as it protects their investment on the mortgage at the time of completion. Proof of insurance will be needed at the lawyer’s office as well.
5. Service Charges
Any new utility that services your hook up, such as telephone or cable, may require an installation fee.
6. Legal Fees
Even the simplest of home purchases must have a lawyer, or notary, involved to review all paperwork. Some buyers opt to use a notary but if there is a problem, then a lawyer will need to be hired anyways. Shop around, as rates vary, and count on costs being approximately $1,000 or more.
7. Mortgage Insurance Fee
Depending upon the equity in your home (if you have less that 20% down payment), banks will require mortgage insurance. GE or CHMC insurance will cost you between 0.5-3.75% of the total amount of the mortgage, depending on the down payment, and this extra amount is added to your mortgage payment.
8. Mortgage Brokers Fee
Some Mortgage Brokers or Mortgage Consultants will charge you a fee and others will provide their services to you for free. It pays to not only shop around for a good rate, but many times using a Mortgage Consultant will really simplify the mortgage process. They only get paid if you use them for the financing, so they will do whatever it takes to make it happen. Our team’s Mortgage Broker does not charge our clients a fee.
9. Moving Costs
The cost for a professional mover can cost you in the range of approximately $1,200-1,500 for a 3 bdrm basement entry style home.
10. Maintenance Fees
Condo and Townhomes will have an extra monthly charge for common area maintenance such as grounds keeping and/or carpet cleaning in hallways. Costs will vary depending on the building ($150-450 per month).
There is usually a move in and move out charge plus elevator reservations.
11. Water Quality
If the home you purchased is serviced by a well, then you should consider having your water checked by local experts. Prices vary depending on the tests done.
12. Local Improvements
If there are local improvements such as the addition of sewers or sidewalks, then it could impact a property’s taxes by thousands of dollars. If it has a septic tank, then you should consider having the septic system checked and then cleaned every 3-5 years.
13. Land Transfer Tax or Property Purchase Tax
This tax is applied whenever property changes hands. The cost is 1% for the first $200,000 of value and 2% for values over $200,000. If you are looking to buy acreage, and if this land was income producing, then there may be a tax on the entire purchase price.