One thing that most first time buyers are not aware of is that there are costs incurred in any real estate transaction. Sometimes it can be negotiated so the seller pays for some of these costs to speed up a transaction, but more than often these are costs that are mostly incurred by the buyer.
Here's a few costs you should budget to pay when closing the sale:
1. A credit report is usually a good idea, although this will often come before the sale is finalized during the mortgage pre-approval process. Many times a mortgage broker will include this cost during the application, but there are certain times when it can be added to the rest of the costs of closing the transaction.
2. To make certain a property is valued at the agreed cost, the CMHC will often require an appraisal of the home for the mortgage insurance process. Paid at the expense of the buyer, it is often around $300. It can be paid at a variety of times during the process, and we will explain to you what your options are.
3. You'll want to pay the $15 it cost to search the title of the property. This will make sure you can buy title insurance, which protects you against claims on the home that you are buying. A good budget range for title insurance is around 1% of the property.
4. Documentation and Recording Fees. These charges are for the Land Titles. Certain jurisdictions have different fees based on local procedures.
5. Property taxes are often pro-rated between the buyer and the seller depending on when they are due and the possession date of the transaction. Condo fee's and other recurring costs of owning the property are split depending on how long during the course of the fee schedule that you own the condo. Insurance is often paid up front for the year as well, which is something most buyers don't account for.
6. The easiest way to budget for the amount required to close a transaction is to keep 1.5% of the price put aside for these fees.