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Location, Style and Cost
The first question you're bound to ask is, "How much home can I
afford?" That depends on a number of factors:
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Your
selected location. Are you set on a specific area? Downtown? The
suburbs? A rural setting? |
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Your preferred
type of home. Detached? Semi? Duplex? High-rise? Link? Townhouse?
New or Resale? There are a variety of home styles you will want
to explore. |
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Your income.
After all, it's not just the mortgage you have to take into account.
There are property taxes, utilities, and in some cases condo or
strata fees. As a general rule of thumb, your monthly home-carrying
cost should not exceed 30-35% of your income. |
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Market conditions.
Is it a buyer's, sellers or balanced market? |
There are also additional
costs to keep in mind. It's a good idea to work out exactly what you
want and what you can afford before you begin the search. Be specific!
After all, you don't want to suddenly come to the realization that your
dream house has come with a nightmare of bills and expenses. Stick to
looking at houses in your price range. The more you've thought it out,
the better your RE/MAX agent can meet your needs.
A part of deciding just what you can afford can be accomplished by meeting
with your bank or a mortgage broker and negotiating a pre-approved mortgage.
There are many types of mortgages and many different terms. Research
all of your options. This ensures that there are no surprises once you're
ready to make an offer.
What
Can I Afford?
There are two types of costs in buying a home -- the initial amount
you will need for your purchase and the ongoing costs of paying back
your mortgage along with monthly operating costs. The largest one-time
cost is the down payment. It usually represents 5-10% of the total price
of the property.
Typical One-time Expenses:
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Mortgage
application and appraisal fee |
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Property inspection
(optional), due at time of inspection |
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Legal fees,
due at the time of closing |
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Legal disbursements,
due at the time of closing |
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Property survey
(sometimes provided by seller), due at the time of closing |
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Land transfer,
deed tax or property purchase tax, due at the time of closing.(in
Quebec within three months following signing) |
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Mortgage interest
adjustment (if applicable), due at the time of closing |
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Home and property
insurance, at closing and ongoing |
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Moving expenses,
due on the date of move |
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PST on High
Ratio mortgages |
Typical
Monthly Expenses:
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Mortgage
payments |
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Maintenance
(this could be condominium fees, or allocated maintenance fees) |
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Property and
content insurance |
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Property taxes |
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Utilities |
Once you've figured
out your monthly expenses and what you can afford, you can start your
search. It could happen that the first home you see is the one you want;
or you might look at home after home with none of them catching your
interest. Rest assured, the home you're looking for is out there, and
when you find it, you're ready to make an offer. If your offer is accepted,
the next steps are closing and moving into your new home.
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