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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.
Forecast Update: Economies Shutting Down
Rapidly evolving developments necessitate an update to the forecasts we published just last Friday. Additional quarantine or shut-down measures have been put in place in a number of countries in the last few days. As a result, we now anticipate global GDP growth to be 0% in 2020, followed by a sizeable rebound in activity in 2021 given our view that economic activity will rebound quickly once the virus is no longer a serious threat to public health. At present, we believe activity will begin to return to normal in the third quarter, except in countries where containment measures were aggressively deployed in the first quarter (essentially the Asian economies), where activity resumes in the second quarter. In Canada, the closure of non-essential business in Quebec and Ontario announced earlier this week will have large economic consequences. At present, we believe Canadian economic activity will fall by 28% in Q2 as these measures are felt. If other provinces follow, the fall in Q2 economic activity would be in the 35% range. We now assume that economic activity resumes by the start of the third quarter and that growth rebounds sharply at that time. However, the 20% drop in US economic activity in the second quarter will restrain the rebound in Canadian activity in the third quarter owing to the usual lags between US and Canadian economic outcomes. Under these assumptions, Canadian GDP would fall by slightly more than 4% in 2020 and rebound by 5.1% in 2021. Though we have not included any additional measures in this update beyond those already announced, we believe a substantial ramping up of fiscal support measures in Canada is forthcoming. There is a chance that aggressive virus management measures are required beyond Q2 to ensure the virus is truly well-contained. Evidence in Asia this week suggests that even in countries where aggressive management measures have been put in place, COVID-19 can come back quite quickly. If measures in Canada are not lifted by the end of Q2, growth would fall again in Q3, and GDP would fall by 6.3% in 2020 instead of the 4.1% we currently expect. A key question for forecasters is the length of the virus-related restrictions on firms and households. As noted above, a shift of one quarter in the resumption of normal operating conditions can have a large impact on growth outcomes. Since we do not have a good handle on the ultimate length of the interruptions, we consider it more informative to assign probabilities to the time at which virus containment measures end. At this time, we believe there is a 75% chance that activity resumes by Q3 and a 25% chance that activity returns to more normal levels by Q4. How officials manage virus containment internationally, as well as the evolution of the virus, will inform our assessment of probabilities going forward. Source: Scotiabank Economics
Home resale market was gaining momentum prior to Covid-19
At the national level, resale home prices were gaining momentum in February. The 0.4% monthly gain in the Composite index was double the average of the previous ten years for a month of February. In particular, after 12 consecutive monthly declines, Vancouver HPI rose in each of the last five months, reflecting the fact that Vancouver resale market recently returned to balance. Sure, we still saw weakness in other regions, such as the Prairie Provinces (Alberta, Manitoba and Saskatchewan) where markets were still favorable to buyers. But CREA just reported a rather generalized increase in home sales in February, including for Calgary and Edmonton. Unfortunately, then came the outbreak of Covid-19 and its impact on oil prices and disruptions in the supply chain. The unprecedented sanitary measures imposed by the authorities to tackle the pandemic will severely impact business activity and jobs over the coming months. In that situation, the home resale market should be heavily curtailed for the coming months. Source: Teranet Inc., and National Bank of Canada