10 Questions To Ask About The Cost Of Buying Your First Home

There is a lot of information about buying a home. We have drilled it down to essential information that you need to
know when buying your first or next home:

1. What will the Down Payment be?

A down payment is the part of the home price that does not come from the mortgage loan. The down payment comes from your own money. You can buy your home with a minimum down payment of 5%, if you have mortgage loan insurance from CMHC. You need a down payment of at least 20% for a conventional mortgage.

2. How much is the deposit?

The deposit is paid when you make an Offer to Purchase to show that you are a serious buyer. The deposit will form part of your down payment with the remainder owing at time of closing. If for some reason you back out of the deal without having covered yourself with purchase conditions, such as financing, home inspection, etc., your deposit may not be refundable and you may be sued for damages. The size of the deposit varies.

3. What is Home Loan Insurance?

To purchase a home you must have a minimum 5% down payment. If your down payment is under 20% it is considered a high ratio mortgage and you must account for home loan insurance, provided by the Canadian Mortgage and Housing Company (CMHC) or Genworth Financial.

Insurance fees typically range from 1-3% of the mortgage principal and depend on the borrowing amount and percentage of down payment. Insurance fees can be added to the principal of your mortgage and paid monthly or paid upon closing.

4. What are the Legal Fees?

When you buy a home, you need a lawyer to complete a title search, ensure all the documentation has been accurately completed, register your mortgage and register you as the new owner of the property. Legal fees The amount of these costs will vary, depending on where you live and what kind of home you’re buying.

5. What is the Appraisal Fee?

Your mortgage lender may ask you to pay for a recognized appraisal in order to complete a mortgage loan. An appraisal is an estimate of the value of the home. Appraisal fees vary.

6. What is the Property Inspection Fee?

A home inspection a condition is typically a condition on your Offer to Purchase. A home inspection is done by a qualified home inspector to provide you with information on the condition of the home. The Property Inspection fee will range
(approx. $400-$800).

7. What is the cost of Title Insurance?

Your lender or lawyer may suggest that you get title insurance. This will cover loss caused by defects of title to the property. Title Insurance fees varies with properties and price range.

8. What about Prepaid Property Taxes?

Property taxes are charged by the municipality where the home is located. They are based on the value of the home. The seller may have already paid property tax or other expenses that apply to the time after the house passes into your hands. You will need to pay the seller back.

9. What is the cost of Property Insurance?

The mortgage lender requires you to have property insurance because your home is security for the mortgage. Property insurance covers the cost of replacing your home and its contents in case of loss. Property insurance must be in place on closing day.

10. What are other costs to consider when buying a home?

Depending on your situation, you may have some other initial expenses to consider such as moving expenses, renovations or repairs, condominium fees, utility fees – telephone, gas, electricity, cable TV, satellite TV, Internet etc.