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costs

I’m buying a home – what are my closing costs?

June 4, 2008 · 1 comment

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If you’re a first time home buyer, you may be wondering what sort of costs you’ll be facing down the road when it comes time to close the sale on your home. Because there are so many fees, expenses, and taxes to pay, it may be a little scary and overwhelming. Below is a list of the general costs you’ll need to be aware of when you’re closing the deal.

As a rule of thumb, expect and budget approximately 2 – 3% of the purchase price of your home for closing costs. That means if you’re buying a $200,000, you’re looking to pay around $4,000 – $6,000 in total for closing costs. Of course, this is only a general outline, so make sure to ask every person involved in the deal to get a better scope of your costs.

  • Home Inspection – A qualified inspector will assess your property for any potential defects as well as give you vital information on your home. Expect to pay anywhere between $250 – $350.
  • Appraisal - The lender will arrange for an appraiser to provide a professional opinion on the current market value of your home. This will cost anywhere between $100 – $300.
  • Legal Fees - Your lawyer will be handling all the vital paperwork related to the purchase of your home. You will be paying for the legal fees for closing your home and mortgage, as well as paying additional disbursement fees that cover things such as courier costs, photocopies, faxes, supplies, and other registrations. Remember to ask for a quote including the disbursement fees so you’re not in for a surprise later. Fees vary, but they generally range from around $1,000 – $1,300 depending on the circumstances and the lawyer.
  • Land Survey or Title Insurance – The seller will most likely provide you with a survey of the home. If no survey is available, you can usually get a replacement for around $600 – $900. However, many lenders will also accept title insurance instead, and that alternative will only cost you a couple hundred dollars. Make sure to ask your lender and check your options.
  • Fire Insurance – Be prepared to arrange and maintain fire and extended coverage insurance for the balance of the mortgage or the replacement value of the building. This cost will vary depending on your home, the amount of coverage, the insurance company, and even the city, but expect to pay anywhere between $250 – $600 annually.
  • Ontario Land Transfer Tax – Read my previous article about land transfer taxes and how to calculate them for your purchase.
  • Interest Adjustment – Oftentimes, mortgage payments are due on the first of the month. If you closing date does not fall on this day, you’ll usually have to prepay the amount of interest accruing up to the 1st of the following month. This is known as the interest adjustment date. If you’ve opted for bi-weekly or weekly payments, this period will be shorter.
  • Mortgage Insurance & PST - If your mortgage is insured, the insurance premium will usually be added to the mortgage so you don’t have to pay in cash on the closing date. You will, however, have to pay the provincial sales tax of 8% on closing.
  • Closing Adjustments – This typically covers the utilities that the seller has prepaid for and will recover from you.

Are you buying a new home? Don’t forget that you must pay GST on brand new home purchases! Resale homes already have the GST included in the price. Other costs that you should think about are moving costs, appliances, decorating, repairs, tools, and utility hook ups.

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  • Bret
    Great article. Covered most of the important points. :)

How much will it cost to renovate my kitchen?

February 24, 2008 · 4 comments

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If you are looking for the best bang for your renovation dollar, kitchens and bathrooms are still considered to be the projects with the highest potential to add or maintain value in a home.

If you are considering selling your home in the near future, talk to a REALTOR® for tips on how to make your home more appealing and “saleable.” You may find that a new kitchen is not in your best interests and a fresh coat of paint and some minor repairs are all that’s needed. Because renovating a kitchen can be one of the more expensive projects a homeowner will undertake, you’ll want to consider the length of time you expect to stay in your house.

According to the Appraisal Institute of Canada, if you are remodelling your kitchen as a face-lift prior to selling it, it’s recommended that you spend no more than 10-15% of the cost of your house. If you are going to remain in your house for more than five years, you can spend 25% or more – and in most cases you will recoup the cost of the renovation when you sell.

How much will it cost?
Kitchen renovations can cost you anywhere from $2,000 to $3,000 for a cosmetic facelift with no new cabinets, plumbing or electrical changes. Look to spend at least $10,000 if you choose new low-end cabinetry, counters, appliances, flooring, paint, and some minor structural changes. However, the sky’s the limit when it comes to a new kitchen and you can expect to pay $20,000 and up for high quality cabinets, custom work and many upgrades.

Keeping costs down
There are ways to cut costs when updating your kitchen without sacrificing quality.  Regardless of what you do budget, don’t skimp on design, appliances, or labor. These are the basis for a functional kitchen and you should get the best you can afford. To keep costs to a minimum, use stock cabinets instead of custom work, laminates instead of solids, and hang on to your current appliances, if you can. Also try to keep your existing plumbing and electrical and don’t make structural changes to the room.  Planning ahead in detail will also save you money. Any changes or corrections halfway through the process will be expensive.

Tips for low cost kitchen makeovers
If your budget is tight and smaller projects are what you’re aiming for, here are a few ideas:

Resurface or repaint old cupboards
Paint is inexpensive and can transform wooden cupboards in a matter of hours. Try a new painting technique, or a textured look, or a zesty combination of colours. You can also resurface old cupboards with wood laminate, or one of the new, non-traditional plastic-based materials that resist chipping, denting and staining. Formica counter tops, for example, provide the look and feel of expensive solid surfacing at about half the cost.

Use more glass
Replace a few cabinets with glass ones. Glass and mirrors in a room add the illusion of more space, as well as glamour — especially if you add interior lights to your new cupboards.

Change your hardware
Simply adding new cabinet and drawer handles can change the look of a kitchen! With the many choices in colour, size and style of drawer knobs and handles, there’s no limit to what you can achieve.

Floor and wall facelifts
Paint, wallpaper and flooring in a variety of textures, styles, colours and patterns can easily spice up a bland kitchen. Stencil a border around a window, below a ceiling, or between the cupboards and the counter tops and you can change the mood overnight.

Be innovative
A good kitchen should not only look great, but stand up to daily wear and tear. It should function well and enable people to move freely between it and related areas of the house.

If you plan to completely remodel the kitchen, be honest about your ability. You may want to leave this important job in the hands of an expert who can do the work quickly and professionally. A kitchen designer/contractor can suggest unique ideas and come up with creative solutions to particular problems. Finally, be sure to get at least two bids on the work you plan to do and compare these carefully.

This article was provided by the Ontario Real Estate Association. Many thanks to OREA!

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This post has 4 comments
  • mandan@09
    too much money it takes

  • Kitchen Designs
    Great Post....Renovating a kitchen is a big undertaking and one that requires careful planning. If you’re thinking about redoing your kitchen, these ideas offer some important things to consider before you go ahead with your renovating plans.