Are you considering shopping for a new home? Have you created a realistic new home budget yet?
Buying a home is one of the most significant financial decisions you’ll make in your lifetime. Many people focus on the down payment and monthly mortgage costs of home ownership. However, they often forget that there are an array of additional costs that come with homeownership. By understanding these expenses upfront, you can budget more accurately and avoid any future financial surprises.
Here’s a breakdown of the extra costs associated with buying a home:
1. Closing Costs
These are the fees and charges you pay at the final step of the home purchase. They may include;
- Appraisal and home inspection fees
- Title insurance and title search fees
- Attorney fees
- Transfer taxes
2. Property Taxes
Property taxes vary widely depending on your location and the assessed value of your home and it’s important to include what that value is when putting together your home budget. You can find a convenient Tax Calculator on the City of Toronto’s website and it’s easy to use. Just plug in the assessed value of the property you are considering buying and it will calculate your yearly taxes.
3. Homeowners Insurance
Most lenders will require that you provide proof of insurance before finalizing a mortgage and costs vary depending on the home’s size, location, and condition. Additional coverage, like flooding , may also be required based on your region.
4. Utilities and Services
Estimate how much you’ll pay for utilities like water, garbage, electricity, gas, and internet and cable. Keep in mind that you may need to also factor in services like lawn care, pest control, or snow removal to your home budget. These costs all can add up.
5. Maintenance and Repairs
Will your new home require painting or some other repair prior to moving in? Factor this in to your home budget. Also keep in mind that owning a home means you’re responsible for all maintenance and repair costs going forward, from a leaking faucet to a new roof. A good rule of thumb is to budget 1% of your home’s value annually for upkeep.
Buying a home is an exciting milestone that is why it is so important to look beyond the sticker price. The more aware you are of the true costs of a home you’re interested in buying, the better choices you’ll be able to make.