Buying your own home can be exciting. But some homebuyers are surprised when they find out they need to pay more than just a down payment before they can take possession of their new house.
To avoid being caught out, there are some hidden fees that you should be aware of, such as insurance and inspection costs. Knowing what expenses are involved when buying a home will help you develop a plan and a budget to help you make your dreams of homeownership a reality. Ask your mortgage broker about these hidden costs.
Insurance
Insurance costs are often tied into closing costs, which include inspections, taxes and legal fees. Depending on the type of mortgage you’re applying for, you may need to buy mortgage default insurance. It offers protection to the lender in case you are unable to pay for the loan. In Canada, borrowers who have less than 20 percent for a down payment are required by the Canadian Mortgage and Housing Corporation to have mortgage default insurance.
You also have the option of buying mortgage life insurance to protect your family from losing the home in case of your death. Lenders will also expect you to buy title insurance, which protects you from troubles with the title, such as defects or omissions.
Inspection
It is a good idea to have a home inspection before you buy the property. While it may not be required by your lender, paying for an inspection now can help you avoid high repair costs in the future.
Taxes
If the owner of a home has prepaid their property taxes, you’ll need to reimburse them for the amount they paid past the closing date. You may also need to put some money aside for sales tax and land transfer tax.
Legal fees
When you buy a home there is a lot of paperwork involved and it’s best to have a real estate lawyer take care of it for you. While it is an extra cost to the purchasing of your home, it gives you peace of mind to know that it has been taken care of by a professional who understands the ins and outs of real estate law.
Mortgage Interest Rates
Another cost of homeownership that you need to take into account is the mortgage rate, which will impact how much you pay in interest over the life of your mortgage. If you have a variable rate, it means the amount you pay in interest each month varies depending on the market rate. You’ll need to account for a fluctuation in the amount of interest you pay, which will come from your monthly mortgage payments.
If you would like to learn more about applying for a mortgage, and what kind of mortgage rates in Toronto you can expect, call Northwood Mortgage™ at 888-492-3690 or contact us here.
