The purchase of a home is usually the largest expense you will make in your life and your home mortgage loan will be your biggest debt.
Even if you spent the time you need to calculate how much it will cost to pay off your house, many other expenses are related to the purchase of a home. You could have neglected them…
In some cases, the amount of these “unexpected” expenses exceeds $12,000. In order not to forget those important fees, here is a list of everything you would remember.
Down payment: Usually, the down payment is equal to at least 5% of the purchase price of the house for a high ratio and at least 25% if you apply for a conventional mortgage.
Inspection fees: The inspection fee and the report that describes the condition of the house you want to buy can cost over $200.
Assessment fee for the house: Your bank can require a property assessment, which is not the same thing as the inspection you personally require. Those fees usually cost in a range between $200 and $400.
If you choose a high ratio home mortgage loan (down payment lower than 25%), you may need to take home mortgage insurance. Some banks require insurance to protects them against the risk of financial loss if you miss your obligations. The premium is based on the ratio of the loan amount and property value and can vary from 0.65% to 2.75%.
Transfer duty: Cities usually collect a fee on the transfer of any building within their territory.
Home insurance: Banks often requires this type of home insurance to protect the house that is given as a security in counterpart of their home mortgage loan. The amount of the home insurance should cover the cost of rebuilding your home and its contents.
Legal fees: They are due at the time of possession of your home and are of minimum $500. Your notary will also charge fees for direct verification of legal status of the house.
That’s all for this article. But remember that you must plan several costs that are associated with the purchase of your new house.
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