If you're new here, we will give you everything you need to know to make a mortgage application online with Mortgage Architects Click here for info
Some first time homebuyers are shocked at their closings when they are asked to write cheque after cheque for additional costs about which they were totally unaware. While in many cases getting a Calgary mortgage through a trained mortgage specialist ensures you are informed of all the added costs in the mortgage, this is not always the case.
Homebuyers who have committed every dime they have towards the down payment with no cash cushion for hidden costs can find themselves in a bind. As early as possible in the process you need to review with your realtor, your lawyer, or your mortgage specialist, every dime you will be expected to come up with. Here are some of the more common hidden costs.
Closing Costs
Closing costs are not exactly hidden but what is included and how much you will have to pay may be. Some of these items may be negotiable in the contract, but only if you are aware of them ahead of time. There may be property tax and interest rate prorations depending on the time between the contract signing and the closing. Legal fees you did not anticipate can pop up under closing costs as well. Most Calgary mortgages require a lump sum closing fee of around 1.5% to cover assorted costs. To be prepared you have to know these amounts.
Home Inspections and Land Survey Fees
Lenders require legal verification of the property boundaries as well as a professional assessment of the home’s condition. Somebody has to pay for this and unless you negotiate it in the contract to purchase it may end up coming out of your pocket, not the sellers.
Appraisal Fees
Lending institutions do not accept a comparative market analysis prepared by the realtor as evidence of the home’s true market value. In overheated housing markets, lending institutions must protect themselves from loaning more money than the house is truly worth. They will require an independent professional appraisal and once again, somebody has to pay for it.
Homeowners Insurance
At closing the property officially transfers to you and the lender will require you to have proof of insurance. Most realtors will let you know to budget this cost early in the game but if they do not you could find yourself delaying the closing. Delays will cost you more money in prorated taxes, interest adjustments, and possibly utility costs.
Utility Connections
Most sellers arrange to discontinue their utilities on the day of closing. Buyers then need to arrange for the services to be reconnected, which often involve additional service charges.
In summary, while a few of these fees can be negotiated into the seller’s costs, none of them are avoidable entirely. You need to know exactly what you will be expected to pay so you can include it in your budget. Simply put, the cash on hand you will need to purchase that home is always more than the down payment amount. Protect yourself by finding out how much more.
