When you think about purchasing a home, many first-time buyers assume that your home investment begins with the down payment.
There are several factors to include in your home-buying budget — and not all these costs occur at one time.
So when do you need to be ready to put money down?
There are two phases to consider for your home-buying budget: 𝘖𝘧𝘧𝘦𝘳 and 𝘊𝘭𝘰𝘴𝘪𝘯𝘨 .
Let’s break down exactly what falls into each of those categories so that you can be fully prepared for your purchase.
Here’s what to expect when you put in an 𝘖𝘧𝘧𝘦𝘳:
◾ Deposit: To put in an offer on a home requires a deposit. This deposit secures your offer, shows the seller that you are serious about the purchase, and ensures that you don’t lose the home to another buyer. The deposit then becomes part of the down payment once you have purchased the home. Deposit amounts vary based on purchase price and market conditions, so talk to your agent about the deposit that’s right for your purchase.
◾ Appraisal Fee: Generally in the $300 range, an appraisal confirms to your lender that you are paying fair market value for your home and prevents you from borrowing more than you need to.
◾ Home Inspection: Next to having your financing secured a home inspection is probably the most important step in purchasing a home. Home inspections cost around $500 but it’s well worth the time, stress and future problems that you will avoid by identifying issues that are not always apparent to untrained eyes.
Now, let’s talk about 𝘊𝘭𝘰𝘴𝘪𝘯𝘨 𝘊𝘰𝘴𝘵𝘴:
◾ Lawyer Fees: A real estate lawyer or notary is required to complete the purchase of your home. The lawyer will review all legal documents and helps to ensure that you receive a clean title to the property.
◾ Property Transfer Tax (First Time Homebuyers exemption): This tax is based on the amount that you paid for the property and balance on your mortgage. Costs vary depending on factors such as your municipality, property size.
◾ Common GST applications (i.e. Brand-new construction and recreational properties). I always recommend that you speak with an accountant if your purchase involves GST
◾ Title Insurance: This optional insurance is a one-time fee that protects you from losses related to the property title or ownership such as unknown title defects, existing liens, structural encroachment issues, title fraud, and errors in surveys and public records. Talk to your lawyer about whether they would recommend title insurance for your purchase.
◾ Moving Expenses: As moving day approaches, you’ll need to arrange for cable, internet, electricity, natural gas or other utilities at your new home. Planning for these costs ahead of time will ensure that the transition into your new home is as smooth as possible.
Buying your first home is a huge step and can feel overwhelming. You need a team you can trust and who will be there to guide you through the whole process.
With over 50 years of collective experience helping people buy and sell in the Okanagan, we know the market well and I will be there with you every step of the way.