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TORONTO - First-time homebuyers are scouring the market for deals, hoping to take advantage of lower prices but real estate and mortgage experts caution that shoppers need to consider the wide array costs that come with buying a home - including ones that aren`t immediately obvious.
They say it`s part of a planning process that should start long before the house hunt begins.
Dianne Usher, division vice-president for Royal LePage, says first-time buyers need to run through a checklist of the essential services that will add extra costs to their bottom line.
"Some of the costs that people tend to forget about, or are unaware of, are legal fees," she said.
"They`re going to need a lawyer to search and confirm title to the property, physically close the transaction, to register and prepare any charge or mortgage documents.
"They`re going to arrange for title insurance, which for some lawyers is an additional cost."
Then there are other factors, like initial property deposits, which are part of down payments, Usher said. Those can increase up-front costs by as much as five per cent, she suggested.
It`s a confusing process for those who haven`t done it before, which is why it`s best to start planning early.
"When I get a client sitting down with me, we actually have a closing cost sheet," said Jeff Mayer, an agent at Mortgage Intelligence, a Toronto-area mortgage broker.
He said making a detailed list helps potential buyers determine whether they can afford that dream home they always wanted, or if they should scale back their expectations to something more reasonably priced.
Mayer said his sheets break down monthly expenses and assess general affordability factors. He said he`ll ask clients to determine their maximum, medium and "comfort level" mortgage approval.
"You want to look at the actual payment on that house, meaning the mortgage with mortgage insurance," he said.
"You want to look at what your average household costs are - meaning the heat, hydro, gas, maintenance on the property, and from there you want to see if that`s something you can sleep with at night."
"I always tell my clients to downgrade whatever they want to buy. So if they want to buy $500,000 buy $450,000."
Usher said that homebuyers need to choose a knowledgeable local realtor with a good reputation.
Read the full article here.
They say it`s part of a planning process that should start long before the house hunt begins.
Dianne Usher, division vice-president for Royal LePage, says first-time buyers need to run through a checklist of the essential services that will add extra costs to their bottom line.
"Some of the costs that people tend to forget about, or are unaware of, are legal fees," she said.
"They`re going to need a lawyer to search and confirm title to the property, physically close the transaction, to register and prepare any charge or mortgage documents.
"They`re going to arrange for title insurance, which for some lawyers is an additional cost."
Then there are other factors, like initial property deposits, which are part of down payments, Usher said. Those can increase up-front costs by as much as five per cent, she suggested.
It`s a confusing process for those who haven`t done it before, which is why it`s best to start planning early.
"When I get a client sitting down with me, we actually have a closing cost sheet," said Jeff Mayer, an agent at Mortgage Intelligence, a Toronto-area mortgage broker.
He said making a detailed list helps potential buyers determine whether they can afford that dream home they always wanted, or if they should scale back their expectations to something more reasonably priced.
Mayer said his sheets break down monthly expenses and assess general affordability factors. He said he`ll ask clients to determine their maximum, medium and "comfort level" mortgage approval.
"You want to look at the actual payment on that house, meaning the mortgage with mortgage insurance," he said.
"You want to look at what your average household costs are - meaning the heat, hydro, gas, maintenance on the property, and from there you want to see if that`s something you can sleep with at night."
"I always tell my clients to downgrade whatever they want to buy. So if they want to buy $500,000 buy $450,000."
Usher said that homebuyers need to choose a knowledgeable local realtor with a good reputation.
Read the full article here.