To make your home buying transaction go smoothly, please plan ahead to include the following possible expenses when purchasing a home. Prices are estimates and vary from location to location. This list is mainly designed for buyers purchasing in Calgary, Alberta
• Realtor® There are no costs to hire a Realtor® to assist you in finding a home and represent you throughout the transaction (Starting off on a positive note) 🙂
• Initial Deposit. This forms part of your down payment and must be paid when you make an Offer to Purchase. Initial deposits are usually around $10k for a $350k home – enough to assure the seller that you are serious about your offer.
• Down Payment. With mortgage loan insurance from CMHC you can own your home with little or no down payment. At least 20% of the purchase price is usually required for a conventional mortgage. Less than 20% is called a High-Ratio mortgage.
• Mortgage Loan Insurance Premium. If yours is a high-ratio mortgage (less than 20% down payment), your lender may need mortgage loan insurance. Your lender may add the mortgage insurance premium to your mortgage or ask you to pay it in full upon closing. For more information, please visit http://www.cmhc-schl.gc.ca/
• Appraisal Fee. Your mortgage lender may require that the property be appraised (ie. When you put more that 20% down and therefore don’t require a Mortgage Loan Insurance Premium, the lender will want the property appraised) The appraisal is an estimate of the value of the home. Sometimes, the lender provides the appraisal as a service for getting the mortgage through them. Talk with your lender/mortgage broker to find out the details.
• Home Inspection Fee. Remember that this may be a condition of your Offer to Purchase. A home inspection is a report on the condition of the home and may cost over $500, depending on: type of house, year built, sq footage amount, basement development, garage, etc. It is ALWAYS recommended to get a Home Inspection done. The peace of mind alone is worth the money for probably the biggest purchase you’ll ever make.
• Prepaid Property Taxes. Some of the property taxes may have been pre-paid for the months/year ahead, and this has to be paid back. (Blogpost: How to Calculate Your Property Tax Adjustment)
• Property Insurance. The lender requires this be in place by closing day because the home is security for the mortgage. This insurance covers the cost of replacing the structure of your home. This is different from content insurance which only covers your valuables inside the house.
• Legal Fees and Disbursements. Must be paid upon closing and cost around $1500, depending on the price of your property. Your lawyer/notary will also bill you direct costs to check on the legal status of your property. While Alberta does not levy a land transfer tax, there are nominal registration fees.
• Title Insurance. Your lender or lawyer/notary may suggest title insurance to cover loss caused by any unknown defects of title to the property.
• Utilities. If you don’t have previous history with the Utility/phone company, they may require a deposit to activate your account. This is credited later on providing your payments are up-to-date.
• Moving costs. Make sure you have enough money to buy pizzas and beers for your helpful friends, and maybe enough to rent a moving truck.
If this is a first time home purchase don’t forget to set aside money for
-gardening equipment (lawnmowers, rakes, hoses, etc for single family dwellings)
-appliances (be sure to check which appliances are included in the sale, and which may need replacing in the near future)
-furnace duct cleaning
As a rule of thumb, have at least 1.5% of the purchase price saved aside for closing costs.
Saving up that little more past the downpayment amount will make your transition into your new home that much more stress-free and enjoyable!