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revealing the "hidden costs" of buying a home

Ever gone on an all-inclusive tropical holiday? "Awesome!" you think. "Everything's covered! I don't have to worry about a thing!" Then you get to the resort, and you discover that breakfast and lunch aren't included, and you hadn't thought about the price of taxis, and there's a room service charge at the hotel. Suddenly, you find you're spending quite a bit more than you'd planned.

Well, that can happen with buying a home, too. Your down payment and mortgage aren't the only costs you'll incur. While the following list is not exhaustive, here are some of the many expenses many homebuyers find they haven't planned for:

Home inspection fee. A home inspection may save you headaches in the long run. A home inspector will assess the condition of the house you want to buy and tell you if it requires major repairs or if there are fundamental flaws in the building's structure.
Legal fees. These include the cost of hiring a real estate lawyer to negotiate the purchase agreement and close the deal, as well as out-of-pocket expenses incurred by the lawyer for such things as title searches and registrations.
Property valuation fee. Financial institutions typically require that the property be appraised if you're arranging a new mortgage. The cost of the appraisal is normally borne by the borrower.
Property insurance costs. These represent an ongoing expense associated with owning a home.
Adjustment costs. These typically involve reimbursing the original owner for any pre-paid taxes and utilities.
Taxes. Some provinces levy a special charge — usually called Land Transfer Tax or Property Purchase Tax — based on the purchase price.
New furnishings. Don't forget you'll want to furnish your new home — inside and out. It makes sense to take these additional expenses into account.
Survey. It's always wise to obtain an up-to-date survey of the property you intend to purchase. Often, lenders will also make this a requirement of lending to you. If the seller of the home doesn't have a current survey and you aren't obtaining title insurance, you may have to pay a land surveyor to prepare one.
Title insurance. You may wish to obtain a policy of title insurance to cover any title-related issues that may arise in connection with the property. In certain situations, lenders may even require that such a policy be put in place at your cost.
Taxes payable on purchased land. Some provinces levy a special charge — usually called Land Transfer Tax or Property Purchase Tax — based on the purchase price.

Here are some more costs you might want to keep in mind, depending on your circumstances:

If the amount of your mortgage exceeds 80 per cent of the purchase price — for example, if you put down only $25,000 or 10 per cent of a $250,000 purchase price — you must insure it against default. These additional costs may be added to the amount borrowed, or they can be paid up front.

Buying a home can be even more enjoyable than a complimentary cocktail on the beach. After all, they're both a kind of freedom, aren't they? The key is knowing exactly what you're in for and planning for it.

revealing the "hidden costs" of buying a home

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