6 Additional Costs Of Buying a Home

When it comes to buying a home, one has to consider not only the price of the home, but the additional costs that come with the home once it is in the process of  purchase.

Additonal costs of buying a home

Experts agree that you should keep about 2% of the cost of a home aside for the additional costs incurred when buying a home. And no, this does not include and window coverings or furniture.

Here now, is a list of additional costs that you should consider if and when you plan to buy a home.

Additional costs of buying a home #1

Home insurance
Often required by mortgage lenders, home insurance provides you with protection against loss, damage or theft of your property and its contents.

Approximate cost: $1,000 a year

Additional costs of buying a home #2

Life insurance
If you had to choose between term life insurance and mortgage life insurance, you’d probably do best to opt for the former because that way, your dependents can take care of the mortgage and have a some money leftover to deal with other outstanding debts.

Mortgage insurance only covers the remaining mortgage in the event of death and does not provide any monetary cushion, which could lead to problems for those left behind.

Approximate cost: $1,000 to $3,000 a year

Additional costs of buying a home #3

Mortgage fees (loan insurance, application fee)
If you are unable to make a down payment of more than 20% of the purchase price of a home, you will be required to purchase mortgage loan insurance.

This both protects lenders against a borrower’s default and allows people who don’t have much savings realize their dreams of owning a home.

On mortgages that have less than a 25% down payment the mortgage insurer will charge a fee of About $175 for applying and processing the file, as well as appraising the property. On new homes, this fee drops to $75.

Approximate cost: Calculated as a percentage of the loan and is based on the size of your down payment.

Additional costs of buying a home #4

Legal fees
Reviewing the offer, drawing up the title deed, conducting a title search and preparing and registering the mortgage requires a lawyer (or notary, in Quebec).

Approximate cost: Depends on the difficulty of the transaction.

Additional costs of buying a home #5

Property survey (land surveyor)
If the seller does not have a Survey or Certificate of Location or has one that is older than five years, then a property survey may be required to verify your property’s boundaries.

Approximate cost: $600 to $900 for a new survey

Additional costs of buying a home #6

Home inspection
Although it is not mandatory, a home inspection helps homebuyers and sellers rest easy by allowing them to evaluate any structural or mechanical issues with the property and adjust the price accordingly.

Approximate cost: $300 to $400

Be ready for the additional costs of a home

Buying a home is an exciting time and can be full of great things to come, so make sure that you are prepared for the little extras that come with buying a home. You could give up that 2% to a buyer’s agent or you could opt to buy a home without commission and use that 2% to pay off these extra costs.

Visit ComFree.com today and find your dream home, commission-free.

1 comment

  1. Claire Summers says:

    Yeah, we got quite the rude awakening. We put as much as we could as a down payment and then got hit will all kinds of extras. Valuable lessons learned. We could’ve used this article!

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