Cailey's Blog

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How much home can you afford? Part 2 – Closing Costs

on 05/04/2011

Image Credit: Renjith Krishnan

Welcome Back! Earlier in the week I wrote about carrying cost considerations when buying a home. Today I’m going to jump over to the other costs you need to consider: Closing and Moving costs.

After you’ve estimated your mortgage payment and other ongoing costs for carrying your first home, you’ll also need to consider the one-time expenses associated with the purchase of a property.  This includes your closing costs, as well as your moving expenses.

Be aware that there is no set rule for what’s included in closing costs, or how they’re calculated.  Closing costs can vary significantly from property to property, but may include home inspection fees, appraisal fees, title search, survey costs, home insurance and lawyer’s fees.  Some of these costs may be shared with the seller, while others are payable by the buyer only.  YourColdwell Bankersalesperson can give you helpful advice about specifying a cost-sharing agreement for some of these related costs within your offer to purchase.

You will also be required to reimburse the seller for a proportionate share of specific housing expenses that have been pre-paid by the seller and continue after your closing date.  These pre-paid expenses usually include property taxes and utilities, and the amount is typically equivalent to only a few months service.  Your real estate lawyer will give you an exact accounting of these expenses upon closing, so be sure to discuss this with your lawyer in advance, so you will have sufficient funds available to cover these costs at that time.  After these one-time adjustments are made, and the transfer of ownership is completed, you will pay for such expenses directly in future.

In addition, you’ll also have to budget for your relocation costs.  This could include such costs as a moving company truck and labor, packing charges, boxes and wrapping materials, or rental of a vehicle or trailer if you’re doing all or part of the move on your own.  There can be a wide variation of costs for these types of services, so you should start planning well in advance, and obtain comparative quotes from more than one mover.  Get the quotes in writing and ensure that all the required equipment, staffing and materials are documented.  Ask the provider to specify what charges may apply if your move does not proceed on schedule.  Be sure to read all the fine print carefully, so you understand upfront what other charges, such as waiting time, or a late return charge you might incur that are not planned for in the initial quote. 

A real estate agent can be a valuable resource here too.  Not only can they help you estimate carrying and closing costs, they can also recommend experienced and trusted service providers to help you keep the cost of moving and home ownership affordable and keep your move hassle free. If you have any other questions or comments, please feel free to leave a comment or email me at cailey-clow@coldwellbanker.ca

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