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What kind of closing costs may I expect?

Home closing costs are the legal and administrative fees and disbursements associated with purchasing a home in the Greater Toronto Area. These costs can be between 1.5 and 2.5 percent of the purchase price of your home and are in addition to the down payment.  Your lawyer will be able to provide you with a more accurate estimate.

Closing costs generally include the following:

  1. Closing Adjustments: Includes expenses that the seller has prepaid before closing.
 These expenses need to be prepaid by the buyer. Expenses may include prepaid property taxes, utility bills and other charges.
  2. Interest Adjustment: Interest accrued between your closing date and your first scheduled mortgage payment.
  3. Legal Fees and Disbursements: Fees charges by lawyers for professional services required in preparing the mortgage, conducting various searches and drafting the title deed. The disbursements are out-of-pocket expenses incurred, such as registrations, searches, supplies, etc., plus G.S.T
  4. Land Transfer Tax: A onetime tax required when purchasing a home. Calculation is based on the purchase price. First-time home buyers are eligible to receive a fund of up to $2000.00.
  5. Title Insurance Fee: Title insurance is an insurance policy covering the condition of title or ownership of real property at the time the policy is issued and is used to provide ownership protection for a purchaser against losses or damages suffered as a result of title problems. Title insurance is usually obtained by the buyer’s lawyer prior to closing and benefits the buyer.
  6. Home Inspection Fee: The cost of a professional inspection of your home can cost anywhere from $250.00 and up.  Generally the smaller the property the least it cost to do a home inspection.
  7. Fire Insurance: Required by lenders at closing date. The amount required is usually the amount of the mortgage or the replacement cost of the home.
  8. Additional Expenses: May include utility hook-up charges, any repairs you need to make after buying your home, the cost of appliances and window and floor coverings.
  9. High Ratio Mortgage Application Fee: Paid to the mortgage insurer to process your application if you’re applying for a high-ratio mortgage (less than 20% down payment).
  10. Provincial Sales Tax 8%: Mortgages that are CMHC or GE Capital insured (less than 20% down payment) are required to pay the P.S.T. of 8% in Ontario, payable at closing, on the CMHC or GE Capital. The insurance premium may be added to the mortgage amount, however the P.S.T. must be paid at closing.
  11. Mortgage Default Insurance: High-ratio mortgages (those with less than 20% down payment) require insurance against default. The cost is usually added to the mortgage, and ranges from 1.00% to 3.25% depending on the amount of your down payment. There is an additional 0.25% premium for variable rate mortgages.
  12. Moving Expenses: Cost to rent a truck or hire a professional mover.

What are the benefits of purchasing a resale home?

Purchasing a resale home in Brampton, Caledon, Mississauga or Toronto is often a better alternative to buying a new home from a builder, especially when time is a critical factor or there is a scarcity of new homes in the area of your search. While the wait time for moving into a new home can be as much as 2 years, the move-in time for a resale home is normally between 30 to 90 days from the time of offer.

Resale homes have the advantage of being located in established neighbourhoods. Schools have been built, amenities are in place, roads are completed and communities have been defined. New subdivisions often bring surprises that can be a nuisance at the least, and a major predicament for some first time home buyers; schools may not be completed in time for the September start, and the type of school or amenity expected may even change.

Pricing and value are also important factors to consider when purchasing a home. Another advantage to purchasing a resale home is that the price is almost always negotiable. This is rarely the case when purchasing from builders, whose prices are usually firm. Furthermore, owners of resale homes often put thousands of dollars into upgrades prior to sale in areas such as flooring, appliances, bathrooms and kitchens, fencing, landscaping, basements and family rooms. These upgrades not only increase the value of the home, but also make it more appealing for buyers.

Should I buy or continue renting?

Regardless of your situation, everyone needs a place to live. In most cases, you maintain that place by paying rent to a landlord, or paying a mortgage to the bank.

Generally speaking, buying a home makes financial sense if you are going to live in it for at least three, four, or preferably five years. Buying a home requires you to take all aspects of the purchase into consideration; especially all of the costs involved in the process, like appraisal fees, home inspection fees, real estate commissions, etc. If you’re unsure of what fees are required or what the necessary steps are, a qualified real estate professional is your best ally in making the purchase of your new home successful.

Real Estate has always been considered a long-term investment. When considering buying versus renting, the one question you need to ask yourself is, Do I really want to pay RENT for the rest of my life?

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