Buying your first home can be an exhilarating experience.

There’s the anticipation of being approved for a mortgage, the scouring of newspapers, websites and real estate offices for the perfect property in your price range, securing a real estate agent, and the numerous walk-throughs of possible homes that make buying a home so much fun.

Then, after crossing houses off your list and weighing the pros and cons of places you can see yourself living in, you choose the home you’d like to buy. After endless phone calls and haggling over dollars, closing dates, and washers and dryers, you finally have an agreement. You are oh, so close to becoming a first-time home buyer.

But despite all the euphoria that surrounds the home purchase, you must be aware of extra closing costs that arise. These additional fees typically end up being between 3% and 4% of the purchase price of the property and vary depending on the city and/or province your buying in.

Additional fees include:

Appraisal fee

Your mortgage lender wants to be sure the home you’re buying is priced properly for the neighbourhood and market. The lender will hire a professional appraiser (or supply one) to give their opinion on the value of the property. This service costs in the $350 range. Not only does it protect the lender, but also the buyer from being taken advantage of.

Home inspection

Not all buyers choose to have a certified home inspector check the property they’re about to purchase. If you know a trustworthy contractor – and by ‘know’ we mean are best friends with or related to – then you could choose to have them check your home for any issues. But often, the best thing to do is to hire a certified home inspector and be sure the purchase agreement states the sale is pending the completion of a home inspection.

The inspector will check important areas that are not noticeable to the naked or untrained eye, including your foundation, wiring, plumbing, insulation, roof, and every other nook and cranny in the home. Many give detailed lists about the state of each, what needs to be addressed, estimated costs of upgrading, and the time-frame it should be completed. If you don’t like what you see, your purchase agreement gives you the right to back out of the deal. For about $350, a good home inspector can save you thousands in unexpected repairs.

Legal fees

One of the most significant ‘extra’ fees you’ll find when completing the purchase of a house is the legal fees. A lawyer must be hired to draft the proper paperwork between the two parties, ensure the i’s are dotted and t’s are crossed, and acquire the proper signatures. Until this process is completed, the purchase could still fall through. But once that final paper is signed and sealed with the obligatory but optional handshake, it’s a done deal. The legal fees will usually run you about $1,500.

Miscellaneous fees

Other fees can include a land transfer tax (depending on province), utility start-up costs, municipal taxes, home insurance (including fire), moving expenses, and any necessary repairs. You also have to pay GST on a newly built home.

When budgeting for the purchase of your home, remember to leave room for the hidden fees. It will take some of the surprises out of a process that can throw even the most seasoned real estate veteran for a loop now and again.

Dwight@RateSupermarket.ca
Staff writer

Ever been surprised by extra fees? Have a comment? E-mail Dwight at Dwight@RateSupermarket.ca

---

Want us to send you a weekly recap of the latest posts straight to your inbox? (Plus we've been known to send out a giveaway or two.) Sign up for our weekly Friday Roundup.

---