Home Purchase Expenses
There are many costs that homebuyers incur, especially upon purchasing your first home. Some of the expenses related to buying a home are one-time costs, while others are continuing costs.
Your largest outlay is the down payment. CMHC insured mortgages require a minimum down payment of at least 5%. Be prepared to pay for additional costs, such as:
- Legal fees & disbursements
- GST and PST (if applicable)
- Land Transfer Tax
- Property taxes and adjustments (reimbursed to the vendor)
- Interest on interim financing, if any
- Utility payments
- Strata or condominium Fees
- Estoppel certificate fee
- Survey fee
- Home inspection fee
- Water quality and quantity certificate
- Appraisal Fee
- Mortgage broker’s fee (if applicable)
- Mortgage Loan Insurance Premium (if less than 20% down)
- Mortgage Loan Insurance Application Fee (if less than 20% down)
- Moving Expenses
- Renovations and repairs
- Furniture, paint, carpeting, window coverings, etc.
- Service and Utility hook-up fees
- Property/Condominium Insurance
- Mortgage Application Fee
- Deed and/or mortgage registration fee
Additionally, once you have purchased your home, you will incur regular expenses on a monthly, quarterly or yearly basis. Some of these costs include:
- Mortgage payments
- Water and/or sewer payments
- Electricity and gas services
- Cable, telephone and internet services
- Property taxes
- Strata or condo fees
- Repair/maintenance expenses
- Homeowner’s insurance
How to Make an Offer
When you have found a home that you would like to purchase, your RE/MAX® LifeStyles Realty – Maple Ridge sales associate can help you to draft an offer to purchase. Your sales associate will communicate the offer to the seller or seller’s sales associate on your behalf. Your RE/MAX® LifeStyles Realty – Maple Ridge sales associate will help you to generate a reasonable and competitive offer that uses terms and subjects to protect your interest.
An offer can be drafted with or without subjects: an offer without subjects is known as a firm offer and an offer with subjects is known as a conditional offer. A conditional offer puts certain conditions (for the benefit of the buyer) on the purchase of the home. Some common subjects include “subject to a home inspection”, “subject to obtaining satisfactory financing”, and “subject to review of strata meeting minutes”.
Once your initial offer has been presented to the seller’s sale associate and the seller, the seller may choose to:
a. Accept your initial offer; or,
b. Reject your initial offer; or,
c. Present a counter-offer.
The counter-offer may differ from your original offer in respect to conditions, price, closing date, etc. . Offers can be countered back and forth between the buyer and the seller until either the buyer or seller accepts or rejects the counter-offer, ending the negotiations.
Your RE/MAX® LifeStyles Realty – Maple Ridge sales associate can help you to understand the components of offers that you should be aware of and understand and help you feel comfortable with the steps involved in the offer process.
An offer includes certain “terms”, which specify the total price offered and how the financing will be arranged, such as if you will arrange your own with a financial institution or mortgage broker or if you wish to take over the seller’s mortgage (assumability).
Inclusions and Exclusions
These are specifications within the offer that detail the items to be included or excluded from the purchase of the property. Typical inclusions are appliances, window coverings, fixtures and decorative pieces.
A deposit is provided from the buyer to the seller as a token of the buyer’s assurance and intention to buy the property involved. The deposit is applied against the purchase price of the home once the sale has closed. Your RE/MAX® LifeStyles Realty – Maple Ridge sales associate can assist you in proposing a certain and appropriate amount for the deposit.
Items that are usually put in place to protect a party’s interests upon selling or buying the property. Subjects refer to conditions that must be met or in place before the sale occurs.
This is usually the date that the legal ownership of the property transfers from the seller to the buyer and, unless otherwise noted, when the funds for the purchase are concluded.
When the buyer takes possession as specified in contract of purchase sale.
This is the amount that the buyer is offering to pay for the property. The price is usually dependent on market conditions and may differ from the seller’s current asking price.
Purchasing a home involves a lot of paperwork, most of which are contractual documents that will legally bind you to the numerous terms and conditions. For this reason, it is important to have a good lawyer or notary public acting for you to protect your rights and interests.
Finding a Lawyer/Notary Public
If you don’t have a lawyer or notary public, you can look for a referral from friends, family or business acquaintances. Look for someone with real estate experience and discuss their fee scales. Your RE/MAX® LifeStyles Realty – Maple Ridge sales associate can help you locate a reliable legal professional, whom you feel comfortable working with.
Lawyer’s/Notary Public’s Function
You will need a lawyer or notary public to process your purchase and ensure the terms are met:
- ensure that the correct property is purchase
- ensure that the title is transferred to your name
- ensure that the title is free and clear of prior owners’ encumbrances
- ensure that your mortgage is registered properly on title
The legal process varies from province to province within Canada. Specifically, you will need to consult with your chosen legal professional and he/she will explain the process and the steps that need to be completed before you get the keys to your new home.
Legal Fees and Disbursements
The difference between legal fees and disbursements is analogous to the parts and labour you pay when fixing your car. Your RE/MAX® LifeStyles sales associate can help you locate a reliable legal professional, whom you feel comfortable working with.
A home inspection is an objective visual examination of a home’s structural and system integrity.
Why get a home inspection?
Here are some of the reasons why RE/MAX® LifeStyles Realty – Maple Ridge recommends that you get a home inspection:
- To ensure that you are not surprised by major defects (e.g., leaky roof) that need to be repaired
- So you can be advised about the various elements of the home including – heating and cooling systems, structure, electrical and plumbing
- To learn about how the mechanical systems (e.g., plumbing) of your home function and their maintenance
- Certified home inspectors are experts in the numerous features of house constructions
- A third party such as a home inspector has no emotional investment in your new home and therefore, can be truly objective
Who should you hire for home inspections?
Home inspectors are often referred by family or friends. Your RE/MAX® LifeStyles agent can also provide you with a list of inspectors. Look for a home inspector that is trained and certified by a national organization such as Canadian Association of Home Inspectors (CAHI) or National Institute of Building Inspectors (NIBI) and who has errors and omissions insurance. Do not hire someone who has a conflict of interest in relation to your home purchase (e.g., a home inspector who is friends with the seller).
When should you call a home inspector?
Once your offer has been accepted, contact a certified home inspector to set up a home inspection. The contact will stipulate the length of time you have to complete the inspection.
What is involved in a home inspection?
The home inspection will determine the structural and mechanical soundness of the home. Your home inspector can identify existing and potential problem areas, suggest possible solutions and provide estimates for the cost of the work required. You will receive a report outlining the inspection findings. You should accompany the home inspector during the inspection or arrange to meet them at the home so they can walk you through the report. If as a result of the inspection, you have further concerns, have a specialist in that area conduct a more extensive examination.
What does a home inspection cost?
Costs vary depending on a number of factors including:
- Size of home
- Type of home (e.g., townhome, single-family home)
- Number of rooms containing plumbing features, such as kitchens and bathrooms
- Age of home
Additional services that are sometimes requested are radon, septic, oil tank and well testing. Your RE/MAX® LifeStyles Realty – Maple Ridge agent can assist you in obtaining quotes from inspectors before you choose an inspector.
Mortgage lending is a highly competitive field. Information on mortgage rates, which can change daily, is available in newspapers, the internet, through mortgage brokers, from individual lenders, from the Bank of Canada, and through banks and credit unions. Interest rates are just one of the factors to consider when shopping for a mortgage. Other factors such as pre-payments, penalties, types of loans (e.g., variable vs fixed), amortization periods, and terms also need to be considered.
Ask your Agent
Your RE/MAX® LifeStyles Realty (Maple Ridge) real estate professionals can recommend mortgage lenders to check with prior to beginning any serious house hunting so you will know exactly what you can afford.
For further information, please contact a mortgage broker in your area.