Additional Costs
Before you calculate the amount of your down payment and determine what you can afford,
it's a good idea to set aside a few thousand dollars to cover the extra costs that seem
to spring out of nowhere. Following is an overview of costs you could encounter. The
good news is that not all of them will apply:
Property Taxes
If the seller has paid a portion of the taxes in advance, you will be responsible for
reimbursing the seller on closing. Plus, if you have a high-ratio mortgage, your lender
may require that you have your property taxes added to your mortgage payments.
Utility Fees
Utility fees are calculated through a meter so you will be responsible for paying what
you have used up on the meter.
Survey Fee
Your lender will require an up-to-date survey. You can make it a condition of the Offer
to Purchase that the seller provide a survey, or you will have to have one done. If there
is no survey available, you may purchase "Title Insurance" in lieu of a survey which saves
you about $500 - 700.
Appraisal Fee
A basic appraisal usually costs under $250.
Property Insurance
Your lender will insist that you have insurance on your property because your
home is used as security for the mortgage.
Service Charges
You'll be charged for telephone, cable and a variety of other services that you
hook up at your new home.
Lawyer (Notary) Fees
Each real estate transaction requires the assistance of a legal professional to
review the Offer to Purchase, search the title, draw up the mortgage documents and
take care of the details on the day of closing. Lawyers fees range widely depending
on the complexity of the transaction. Ask your RE/MAX agent to recommend a lawyer.
And remember, fees can be negotiated.
Mortgage Loan Insurance Premium and Application Fee
Mortgage loan insurance will be necessary if you have a high-ratio mortgage (less
that 25% down payment). The application usually costs $75 with a valid appraisal,
otherwise it's $235. The actual insurance premium will range from .5% to 3.75% of
the purchase price and is added onto the mortgage.
Mortgage Broker Fee
Some brokers may charge as much as 2% of the total mortgage to find you a lender.
In most cases though, the broker is paid by the lender. Buyers with good credit should
not have to pay a fee.
Moving Costs
Whether you've decided to do it yourself or hire a moving company, now is the time to
budget for the costs involved.
Estoppel Certificate
If you're moving into a condominium (complex not necessarily a high-rise) this certificate
outlines the condominium corporation's financial and legal state. It will cost you up to $50.
Condominium Fees
These monthly fees vary from complex to complex. The fees are applied to everything from
grounds keeping and carpet cleaning to security personnel and health club maintenance.
Depending on the type of structure, these fees will usually be a few hundred dollars.
Home Inspection Fee
For around $300, depending on the size of your home, you'll receive a complete written report
about the condition of the structure. Do your research and hire a reputable firm.
Renovation and Repairs
Your home inspection may indicate the need for some general repairs or a major project. Have
some money set aside, particularly if you are purchasing an older home.
Redecoration
Your taste will be different from the previous owner. Set aside money to paint and wallpaper.
Prepare a list of things you can live with, for now, and decorating faux pas that need immediate alteration.
Water Quality Certification
If you are purchasing a home with a well, you'll want to ensure the quality of the water.
This will cost approximately $50 to $100.
