Thinking of buying a home?
Consider the cost of living in the home. How much will it cost to heat monthly? What about the monthly cost of insurance, electricity, water, maintenance - painting, repairs etc.? If you are considering buying a condominium, what effect will the monthly management fees have on your ability to carry a mortgage?
It can be difficult to forecast the cost of living in a home as compared to living in an apartment. Here is another rule of thumb that may help you to estimate the difference between the two. Take the value of the home you are considering and multiply it by 3 per cent. Then divide that figure by 12. In our example of the $125,000 home, the monthly cost using this formula would be roughly $312 in addition to mortgage and taxes.
The Down Payment
The size of your down payment is a major part of your mortgage consideration. Most lenders today will require a minimum down payment of at least 5 per cent of the purchase price of the home. For instance, our example of a home in the $125,000 thousand range would require a $6,250 down payment.
When you have made an offer, had it accepted and begin to finalize the purchase, there are other costs to be paid in full. There are legal costs, registration costs, possibly house inspection costs and probably a land transfer tax. Your real estate broker will give you an estimate of these costs. Be sure to discuss with your broker the question of what lenders call "interest adjustment date", depending on the date of your closing and the date of mortgage payment upon closing. Be prepared to pay for any heating oil left when you take over and to reimburse the seller for property taxes paid in advance. Don't forget about moving charges, your mover will give you an estimate before you move. You will have to pay the movers upon delivery of the furniture.
You've heard the old saying, home-ownership is all work and no play... but the pleasures of having your very own home outweigh the work involved! Be sure you get maximum enjoyment from the experience by buying within your means.