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Closing Costs: Are You Prepared to Pay?
When buying a home there are a lot of hidden expenses that can take you by surprise. Knowing about these costs can make the process of buying your home much smoother. These costs can come out of [what seems like] nowhere. The hidden price tags lay hidden within insurance, mortgage approval, moving fees and more. Here are the most popular hidden costs when buying a new home. Home Specific costs: Land Transfer Tax To transfer the land your home is sitting on into your name can cost between 0.5% to 2% of the home value. First time home buyers are eligible to qualify for rebates. Newly Constructed Homes If you had your house built from the ground up additional costs can emerge if you want to add any upgrades, landscaping or change materials (ex. flooring). The new built is also subject to 5% GST or 13% HST, but this is normally included in the cost of the house. Home Inspections In order to be made aware of any issues with the structure or systems (ex. Pluming or electrical) of your new home, it will need the appropriate inspections. Most of these inspections cost between $350 to $450. Finalizing Your Mortgage: Appraisal Fee Normally an appraiser is supplied by the lender, but they will evaluate and confirm the market value for the home. This normally costs $400 out of pocket for you. Legal Fees When settling a mortgage, you will need a notary or lawyer to help protect you and your interests. Fees normally start around $500 to $800, plus disbursements and added services. Insurance: Home/Fire Insurance Cost depends on the amount of coverage that is needed, but it will cost at lease $500/year. Tax on Mortgage Insurance If you have a down payment of less than 20% then you must have default mortgage insurance. The insurance can be included with your mortgage payments, but PST is due at closing. For example, if the insurance costs $5000, and PST is 8% then you owe $400 up front at closing. Title Insurance This insurance safeguards you against problems with proof of ownership and also fraud. Fees are normally around $150 to $350. Overlooked Costs: Prepaid Costs If the seller of your home has paid any bills that extend past the closing date you will need to reimburse them those expenses. This can include property tax, electric and hydro bills. This can add hundreds of dollars to the upfront costs as they will need to be paid back within a few months. Moving In Moving trucks, Movers, Changing locks and more. The small things no one thinks about until the last minute. Renting a moving truck can cost $100 or more. Movers are normally a few hundred dollars. It can cost $50 to $60 to change all the locks on the property. Any additional costs will come from buying moving boxes, cleaning supplies to clean the house, any new furniture and/or appliances, these costs add up and can increase the cost of moving by more than you were prepared to pay.
Similar Housing Demand Conditions in Canada and US
Housing markets in Canada and the US are sizzling. Recent headlines have used superlatives to describe housing market conditions in both countries and the data do back this up. Still, a closer look reveals some interesting distinctions as well. Home price and sales metrics show that while the US market is hot, Canadas is hotter. For example, existing home sales, which make up the majority of overall sales in both countries, is well above historical averages, but Canadian home sales have outperformed. As of March 2021, home sales in Canada were 75% higher than the average over 2018 and 2019, while it was 13% above in the US. Likewise, home prices also spiked. In Canada, the average home sold was 32% more expensive than what it was a year ago, and it was 17% higher stateside. From a high level, the list of commonalties across markets during the pandemic is longer than the areas of difference, particularly on the demand side. Perhaps the most influential demand-side driver has been historically low mortgage rates. Responding to the impacts of the pandemic, the Bank of Canada and the Federal Reserve slashed rates and enacted large quantitative easing programs early last year, resulting in a sharp drop in borrowing costs. Given that the US conventional mortgage rate is a 30-year rate compared to Canadas 5-year benchmark, borrowing costs fell faster in America as flight to safety flows lowered longer term yields at the onset of the pandemic. Source:https://economics.td.com/housing-heat-check
CANADA HOUSING MARKET and new stress test
Canadian home sales took a turn in April 2021, declining by 12.5% (sa m/m) from the highest level on record in March 2021. Listings followed suit, falling by 5.4% (sa m/m). While both sales and listings decreased in April, the smaller decline in listings further eased the national-level sales-to-new listings to 75.2% from record high readings earlier this year (the highest being 91% in January). While this is a move in the right direction towards a better supply-demand balance, the ratio is still significantly higher than its long-term average of 54.5%. As a result of this persistent tightness in the housing market, the composite MLS Home Price Index (HPI) rose by 2.4% (sa m/m). This is a deceleration in price gains from paces observed over the last two months, owing in the most part to a slowing in prices for single-family homes and townhouses. Apartments, which had remained relatively close to pre-pandemic levels before accelerating earlier this year have maintained momentum in April. Movements in the housing market this month continued to be broad-based rather than market-specific, as declines in sales were spread out across much of the country. The Office of the Superintendent of Financial Institutions (OSFI) also announced that, effective June 1, the minimum qualifying rate for uninsured mortgages (i.e., residential mortgages with a down payment of 20 percent or more) will be the greater of the mortgage contract rate plus 2 percent or 5.25 percent.