Whether you are tired of renting, buying something bigger or looking for a 2nd home, getting money for a down payment and closing costs often pose major challenges and obstacles. How can you take advantage of the market conditions and the interest rates and still afford it? You will need to plan ahead to cover the many up-front costs of buying a home. Timing is important to help make sure things go smoothly.
- 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 will likely add the mortgage insurance premium to your mortgage, alternatively you can pay it upfront if you choose.
- Appraisal Fee
Your mortgage lender may require that the property be appraised at your expense. An appraisal is an estimate of the value of the home. The cost is usually between $275 and $450 and must be paid when you contract for those services.
This is part of your down payment and must be paid when you make an Offer to Purchase. The cost varies depending on the area, but it may be up to 5% of the purchase price. If you wish to make a down payment of 5% and you give a deposit of 5%, then your down payment is considered to be made. Although the source of the deposit money will still be verified by a paper trail.
- Down Payment
With mortgage loan insurance you can own your home with as little as 5% down payment. At least 20% of the purchase price is usually required for a conventional mortgage.
OWN RESOURCES– 3 months account history of down payment funds If from RRSPs, we will need a 3 month history, or your 3 most recent statements
FROM THE SALE OF AN EXISTING PROPERTY – Sale agreement Recent mortgage statement to confirm the equity If the sale has closed already, we will need the statement of disbursements and proof of profit deposit into bank account
BORROWED FUNDS – A recent account statement showing available funds and payment info
GIFTED FUNDS – Gift letter from related family member Proof of deposit of gifted funds
- Estoppels Certificate Fee (not applicable in Quebec)
This applies if you are buying a condominium or strata unit and could cost
up to $100.
- 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 generally ranges around $500, depending on the complexities of the inspection. For example, it may be more costly to inspect a home that has large square footage, one that is expensive or one where contaminants such as pyrite, radon gas or urea formaldehyde are suspected.
- Prepaid Property Taxes and/or Utility Bills
To reimburse the vendor for pre-paid costs such as property taxes, filling the oil tank, etc.
- Property Insurance
The mortgage lender requires this because the home is security for the mortgage. This insurance covers the cost of replacing the structure of your home and its contents. Property insurance must be in place on closing day.
- Survey or Certificate of Location Cost
The mortgage lender may ask for an up-to-date survey or certificate of location prior to finalizing the mortgage loan. If the seller does not have one or does not agree to get one, you will have to pay for it yourself. It can cost in the $1,000 to $2,000 range. Sometimes title insurance is acceptable in lieu of the Survey, or also knows as a real property report.
- Water Quality Inspection
If the home has a well, you will want to have the quality of the water tested to ensure that the water supply is adequate and the water is potable. You can negotiate these costs with the vendor and list them in your Offer to Purchase.
- Legal Fees and Disbursements
Must be paid upon closing and cost a minimum of $500 (plus GST/HST). Your lawyer/notary will also bill you direct costs to check on the legal status of your property.
- Title Insurance
Your lender or lawyer/notary may suggest title insurance to cover loss caused by defects of title to the property. Title insurance is sometimes acceptable in lieu of a survey/ real property report.
- Fees to The Borrower
Alternative and private lenders charge a fee, sometimes it can be added to your mortgage amount, other times the lender requests it to be paid up front. Our services are free of charge most of the time, however, we would charge a fee if we took your deal to a private company who does not pay our fee directly. Normally we are paid a commission directly from the lender, which is at no extra cost to you the client. We will provide you an estimate of the closing costs involved once we have obtained a mortgage approval for you.
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* This data is provided for information purposes only and is updated daily by Mortgagegirl. Posted rates are subject to change without notice. O.A.C. E&OE