As a first time homebuyer, you're probably very excited about your upcoming purchase. Identifying a home, negotiating the price, and obtaining financing can be quite a strenuous process.
In addition, most homeowners tend to mistakenly prepare their budget according to the price tag of the home. This often leads to buyers overlooking other hidden costs that are associated with the real estate transaction. Make sure you include the following costs into your budget when finalising your home purchase.
Insurance on your mortgage
If you paid a down payment of less than 20% on your mortgage, you will most likely be expected to pay mortgage insurance alongside your monthly payment amount. The insurance protects mortgage lenders from incurring losses if you were to default on your mortgage. The insurance typically costs about 3-5%of the total cost of the mortgage.
Title fees
When you obtain a title for the property, you will be required by the mortgage lender to obtain title insurance. This is a form of insurance that protects you and the lender from issues associated with an improper title.
For example, a title may have building code violations that were not addressed, outstanding legal fees, or neighbour disputes. Title insurance transfers these risks to the insurer and protects you from incurring significant liabilities.
Floors and landscaping
Most homeowners choose to renovate the floors of their new home once they move in. The property that you identified may not be perfect, and it may require slight upgrades to meet your specific needs. This becomes even more apparent if you purchased the home at a lower price due to its current condition. New flooring can cost several thousands dollars, depending on the material you choose and the size of the home.
Conveyancing
To ensure that you conduct the real estate transaction correctly and in adherence to all legal requirements, it is important to hire a conveyancer. Conveyancing solicitors are familiar with all legal nuances that surround your home purchase and they offer critical advice on legal requirements and property transfer steps.
Taxes
The taxman will also expect a share of the transaction costs that you pay when purchasing a home. When a property changes ownership from a seller to a buyer, the buyer is expected to pay a land transfer tax that ranges between 1-3% of the purchase price.
There are also property taxes that you are required to pay as the owner of the property. Some districts will also levy taxes on local residents to finance schools, road construction, public transportation, and other general services.
Share2 March 2018
If you are interested in buying your first property, you will want to make sure that you make the right choice. My name is Kenny and last year, I finally got my foot on the property ladder. It was a long journey which took many years. First, I had to save a deposit which took a long time. Once I had my deposit, I had to find a property which I liked and which I could afford. I contacted a real estate company who helped me as I conducted my search. I am pleased to say that I am really happy with my new home.
