The Top 10 Incidentals To Be Ready For When Purchasing A Home
When buying a home it’s always important to ensure everything is in order, and this especially comes true when dealing with the incidentals of buying a new home. On my website where we provide listings for homes for sale in the Brantford area, we get inquires on a regular basis asking us not only whether they can look at various homes for sale, but they also inquire as to what other incidentals, or, hidden costs they should save up for as well.
It’s not as simple as saving up the money or obtaining a loan from the bank because during the whole process, unforeseen things will come up that will require you to dip into your saving or pocket book.
It’s just the nature of the game and with that said, I’m going to list off the top 10 incidentals to be aware of while you’re in the process of buying a new home or have already moved into it.
The following costs are generally referred to as closing costs or disbursements but some points stand outside those definitions.
Tip#1 Taking on legal fees
The one area which should be of most concern when it comes to incidentals and what could be considered hidden fees are lawyer and legal fees. Generally speaking, hiring a lawyer to review the terms of your offer, register the new title and figure out adjustment costs, a lawyer will perform all sorts of tasks that make the purchase run much more smoothly for you.
In Ontario, you should set aside at least $3000 for legal fees but note that in many instances that amount is much lower; sometimes in and around approximately $1500 to $2500. That’s not too high of a cost for legal assistance when purchasing a home but it’s a big enough chunk that you need to save up for and know where it’s coming from.
Tip#2 Obtaining Title insurance
You do want title insurance. Any real estate agent or lawyer worth his/her salt will tell you. At first glance to some, Title insurance seems like a big waste of money, but have you done your research into the benefits of having your title insured? The main thing Title insurance is concerned with are any issues that may have stemmed from the previous home owners, with costs being deferred to the insurance company but the main concern for many Canadians is mortgage title fraud.
Having your home Title insurance in check keeps you financially protected from all sorts of unforeseeable events and it averages at approximately $250 to $400 to set up.
Tip #3 Prepare for the property survey
For various reasons and at times, the lender will require that a survey is done on the property of the home you’re buying. This survey is conducted in order to accomplish, among other things, the property’s boundary points, rights of way encroachments, or connected (adjacent) properties.
Occasionally the information listed for the property and the survey don’t match. The average cost of a survey on Ontario is approximately $500 to $2000 and even though that seems like a lot of money, if a survey finds you’d be paying more for a home and getting less property, you’ll be glad that you did.
Tip #4 Extra cash to hook up everything (electricity, hydro, cable)
Having extra money for various incidentals like setup-fees associated with hooking up your electricity, hydro, cable/internet, gas and phone should be taken into consideration. Usually, most people prefer to have those necessities completely set up before they move into their new home.
Waiting for the sale to close, and after you move all your things in before setting up the above necessities would make for a lonely, thirsty and dark few nights and days. The costs associated with hookup fees can vary from person to person, but if you already live in a home and are moving, you can calculate the costs based on what you currently pay a month, including at least $100 for the hookup fee for each of them.
Example: if you pay $80 per month on cable and internet, you can safely through in another $80 for the setup fee at your new home unless you’re able to get the set up fee waived. In many cases you can get the setup fee waived so it’s a good idea to try to. You can’t get anything unless you ask.
Tip #5 Get ready to purchase new appliances
Purchasing a new home is an extremely exiting experience, and sometimes especially when we encounter a home that we love so much and most certainly want to buy and live in. From the outside, and even the inside everything can just look dreamy and perfect.
You can tell yourself there’s no way you’re not buying and living in this home – it’s just beautiful, but there’s one problem; what if the appliances don’t come with the home? What if you have to supply your own fridge and stove? Will the washing machine and drying come with the home too?
In an average number of sales, appliances don’t come with the purchase and you have to get them yourself. Unless you can get them second-hand or as a gift from a parent, you’re going to have to fork out some cash if that’s the home you wish to live in. When it comes to purchasing appliances you can easily set aside at least $5000 to $7000 especially if you’re looking to buy top-notch products.
Tip #6 save for monthly fees for condos
This is one of the areas it seems all home buyers neglect to consider especially when purchasing a condo. Because we don’t actually own the property around the condo, but use it at our convenience, condo owners need to pay a monthly fee for various things like lawn maintenance, general repairs, garbage organization and cleaning. As a real estate sales rep in Brantford, I can safely say, I’ve seen condo fees range anywhere from $120 a month to over $700 a month.
Sometimes it seems like buying a condo would be a more financially viable idea, but remember to look out for all the hidden costs and costs you wouldn’t expect to pay when owning a home – costs you’re usually accustomed to paying on a monthly basis like heat and electricity.
Tip #7 Good old property maintenance
Buying your own home provides the greatest expression of independence but aside from all the hidden costs I’ve mentioned above, an important area of concern in the financial department are the good old property maintenance fees that may stack up over the years, starting in the first month you move in.
The list can go on and on: lawn maintenance, property damage due to wildlife, backyard flooding, building a necessary fence or borders (like in the case that you have a backyard pet) and even dealing with broken down furnaces or air-conditioning units. Don’t forget, when we’re in love with a new home we tend to forget to look out for different aspects of the home that could end up costing money down the road, not money in the form of a big chunk but monthly expenses like for instance if your new home has 4 times as much land in your backyard than your previous home.
If your land is much larger than your previous home’s land, you may be forced to purchase a ride-along lawn mower of which a good and reliable one can run you upwards of $1000 to $2000. The more you pay, the longer it lasts.
There’s also the potential for many problems to arise even within the first month you move in that you may have to consider. Things break, decks crack, electrical systems go on the fritz, faucets and pipes leak, windows break, air leaks in and so much more. Ask any home owner, and they’ll tell you that living in a home doesn’t only take paying your bills and monthly mortgage payment, but it can take quite a bit more especially when something breaks or goes haywire and ends up costing you thousands of dollars.
The main take home with this point would be to save up, and save up as much as you can. Sure insurance covers a lot of property damage issues, but believe me, there’s quite a bit that’s not covered under home insurance. Here are at least 5 things home owners insurance won’t cover so take note.
Tip #8 consider the moving costs and moving insurance
Atop of the extra and sometimes hidden costs above is what you’ll fork out for moving your stuff from one home to your new one. This could add up, and if you’re not prepared for it even months before you decide to purchase a home, you’ll be hit with one generally major cost.
There are many variables to take into consideration, but mileage and hourly rate are the two. Depending on how far your new home is from your old one, and how many hours of man-work it takes to move your things, your bill could run up to $1800 to $2800. In some cases that cost will include moving insurance but if it doesn’t you could tack on a few hundred dollars to that too.
Take if from me. I’ve seen what can happen to a person who doesn’t opt for moving insurance and needless to say they wish they did. It’s rare that your belongings will get stolen and we all expect a few things to break, but if that’s not how you’re having it, moving insurance is the way to go.
The GC website provides a perfect resource checklist for all you should consider regarding moving insurance that you should read promptly. Not all moving companies are shady, but many don’t have practices that protect your belongings.
Tip #9 Take stock of the lender fees
This one is a doozy for new home buyers or anyone who’s talked with a real estate agent knows, lender fees could get quite hefty and set you back a few bucks if you’re not prepared for them. Here are just a few common lender fees you may or may not have to consider:
- Application Fees
- Processing Fees
- Credit Report Fees
- Appraisal Fees
- Survey Fees
- Courier Fees
- Tax Service Fees
- Administration Fees
- Underwriting Fees
- Document Prep Fees
- Wire Transfer Fees
- Lender’s Inspection Fees
Depending on the lender these fees can run you upwards of a few thousand dollars, and sometimes a few more. The accuracy of the previous list is determined by who you choose as a lender, and whether or not they provide a flat rate or apply a cost to every service.
Tip #10 Get ready for upgrades costs
Unless you’re wealthy enough to to ensure your new home is custom built to your liking, you may decide you want to add occasional or immediate upgrades to your home. Sometimes when we find the home of our dreams; location, weather, surroundings, home-style etc., we overlook areas of the home that may need repairs or upgrades for – it’s only natural.
This not only happens before moving into a home (i.e. you take a little survey of the repairs that may be needed) but once we move in, we naturally start finding areas that we definitely want to fix!
On old creaky staircase, a door that won’t open properly, a window that won’t shut or open all the way, screens with large holes in them, minor leakage in basement windows. The list can go on and on and will all depend on your taste and what you’ll tolerate as a home owner.
What if your shingles and eavestrough directs heavy rain water down over your front porch? You’ll probably want to get that fixed pronto and seeing that type of issue in the original inspection just isn’t going to happen. What if bats or all sorts of wildlife have left feces spread across your roof? Someone has to clean that up professionally!
The take home
Buying a home can be done, and even though there are seemingly a slew of extra hidden fees and costs to contend with, if you take these points into consideration you’ll be less shocked when they come up. All you really need to do is summarize these points into a small list for yourself and keep it with you so you can familiarize with these potentials. Everyone is doing it so why can’t you should be your motto but my overall advice is to save up as much as you can for after you move into your home so you can continue to make it the paradise you were looking for.