As a first-time home buyer, it’s essential to be aware of the various costs that can arise during the home-buying process. While the purchase price of a home is a significant consideration, it’s equally important to budget for additional expenses that may catch you by surprise. In this blog post, we will discuss some of the hidden costs associated with buying a home, allowing you to plan your finances effectively and avoid any unexpected financial stress.
Closing Costs: Closing costs are expenses incurred during the final stages of the home purchase process. These costs can include legal fees, title insurance, land transfer taxes, and property registration fees. It’s crucial to budget for these expenses, as they typically range from 1.5% to 4% of the purchase price of the home.
Home Inspection Fees: Before purchasing a home, it’s highly recommended to hire a professional home inspector to assess its condition. While this service comes with a fee, it’s a worthwhile investment to identify any hidden issues or potential problems that may not be apparent during your initial visits – or something that you can see! Home inspection fees typically range from $300 to $600, depending on the size and complexity of the property. If you are in need of recommendations for local home inspectors in Calgary, Alberta reach out to us and we can point you in the direction of some great vendors.
Mortgage Loan Insurance: If you are unable to provide a down payment of at least 20% of the purchase price, you may be required to obtain mortgage loan insurance. This insurance protects the lender in case of default. The cost of mortgage loan insurance varies based on the down payment amount and is typically added to your mortgage loan. Be sure to speak with your mortgage broker about this, and factor in this additional expense when calculating your monthly mortgage payments.
Moving Expenses: Moving to a new home involves costs such as hiring professional movers, renting a moving truck, or purchasing packing supplies. The expenses can vary depending on the distance of the move, the amount of furniture and belongings, and whether you choose to hire professionals or handle the move yourself. Consider obtaining quotes from multiple moving companies to budget accordingly and ensure that you are prepared for those costs.
Home Insurance: Securing home insurance is a crucial step in protecting your investment. The cost of home insurance can vary based on factors such as the location, size, and type of the property. It’s recommended to obtain quotes from different insurance providers to find the best coverage at a competitive price.
Utility and Service Hookups: When moving into a new home, you may need to pay fees for utility and service hookups such as electricity, gas, water, internet, cable, and phone services. These costs can vary depending on the providers and any setup or activation fees involved. Contact the utility companies in advance to understand the charges associated with these connections and get the ball moving so that you have these services in place when you move into your new home.
Maintenance and Repairs: Owning a home comes with ongoing maintenance and repair costs. While these expenses may not arise immediately, it’s wise to budget for regular upkeep, such as landscaping, HVAC system servicing, and general repairs. Having a contingency fund for unexpected repairs can help alleviate financial strain in the future.
Conclusion:
As a first-time home buyer in Calgary, understanding the hidden costs associated with buying a home is crucial for a smooth and financially sound transaction. By budgeting for closing costs, home inspections, appraisals, mortgage loan insurance, moving expenses, home insurance, utility hookups, and ongoing maintenance, you can avoid any financial surprises along the way. Consulting with a knowledgeable real estate agent and working with a trusted financial advisor will further ensure that you are well-prepared to handle these costs and make informed decisions throughout the home-buying process. With careful planning, you’ll be better equipped to achieve your home ownership dreams without unnecessary financial stress. We are always happy to help answer any questions you may have about the buying process!
