All about closing

A detailed look at closing, associated costs, and associated definitions

It's important to be ready for the costs that come along with buying a home. It's not as simple as just a mortgage and downpayment.

The deposit makes up a part of your downpayment and is paid when you make an offer on a house. Typically they represent 1% of the purchase price in this area though they can vary.

A downpayment for a conventional mortgage is 20% or more of the purchase price of the home (see my previous post called "All about mortgages" for more information). For a high ratio mortgage it can be as low as 5% of the purchase price. With high ratio mortgages, you will need mortgage loan insurance.

An appraisal fee may be required if your lender asks for it, and as such, will be at your expense. An appraisal is a value estimate of your home. I would be happy to recommend an appraiser for you.

Home inspections are one of the most important conditions included in the Agreement of Purchase and Sale, as if it is not found satisfactory, you may walk away from the sale with no legal repercussions. They typically cost around $500+tax.

If you're looking at a property in a rural area, there are certain things you may want to test for, such as water and septic. A satisfactory water test requires a count of 0 for fecal coliform, and may be required in your mortgage document. This test costs around $40. You can also test the mineral content of the well water to determine it is safe to drink, and ranges in price from $100-300.

The deed transfer tax is paid at closing, and you should plan for this expense ahead of time. This tax ranges from 1%-1.5% of the purchase price of the home depending on where you are along the South Shore of Nova Scotia.

Lawyers charge fees which are payable at closing and will range from $800-1500 or more depending on the type and complexity of the process.

There are many other types of expenses that can't always be calculated in advance or are specific to a property, such as: adjustments for fuel oil, property taxes, utilities, and interest. You may need to obtain a survey or location certificate, and/or title insurance. You may require a moving van and a team to help relocate. When you move into your new home there may be service fees and utility hook up fees. You may also decide that renovations are repairs are necessary.

After you've purchased your home, you should expect regular monthly and/or yearly expenses. These will include:

- mortgage payments

- property taxes

- home owners insurance

- heating and electric payments

- water and/or sewage payments

- cable and internet payments

- repair and maintenance