Home own­er­ship car­ries many price tags

Winnipeg Free Press - Section G - - HOMES - By Todd Lewys

PURE and sim­ple, buy­ing a home is a daunt­ing process. That’s why it’s nec­es­sary — al­most manda­tory, in fact — to do a lit­tle re­search prior to tak­ing the plunge into home own­er­ship. One of the first ar­eas you should look at is what the clos­ing costs will add up to on the home you pur­chase. Why? Well, be­cause clos­ing costs can be both com­plex and costly.

For the sake of ar­gu­ment, let’s say you in­tend to pur­chase a starter home for about $200,000. Not only is the pur­chase price a some­what mind-blow­ing fig­ure for first-time buy­ers, but the costs as­so­ci­ated with mak­ing that pur­chase are in them­selves in­tim­i­dat­ing be­cause there are so many of them.

Let’s take a look at what the clos­ing costs on that $200,000 abode would be:

Land trans­fer tax. This is payable to the govern­ment (land ti­tles of­fice) when the ti­tle of the home is reg­is­tered. The tax is es­sen­tially a per­cent­age of the pur­chase price of the home. So, if you pur­chase a home for $200,000, you will owe $1,650. Right off the bat, a pretty sig­nif­i­cant hit on the old wal­let.

Le­gal fees. Fig­ure on lawyers’ ser­vices cost­ing at least $395.

Sur­vey cer­tifi­cate. You may be able to ob­tain this doc­u­ment from the seller. If not, a new sur­vey will cost $325 plus GST.

Ti­tle in­surance. This may be an al­ter­na­tive to pur­chas­ing a sur­vey cer­tifi­cate and zon­ing mem­o­ran­dum. Typ­i­cal cost is about $200.

Reg­is­tra­tion costs. Also payable to the land ti­tles of­fice, the cost of reg­is­ter­ing a ti­tle is $69, cost of reg­is­ter­ing a mort­gage also $69. There goes an­other $138.

Zon­ing mem­o­ran­dum. Pro­vided by the city or mu­nic­i­pal of­fice, the cost is $35.60 plus GST.

Tax cer­ti­fi­ca­tion. It costs $35 — plus GST — to in­sure your­self against prop­erty tax li­a­bil­ity.

Ti­tle searches, etc. Ti­tle searches, com­puter ac­cess time and ob­tain­ing mi­cro­film copies of doc­u­ments costs an­other $35 plus GST.

Couri­ers. Be­cause large sums of money, ti­tle doc­u­ments, mort­gages — and keys — are not mailed, a courier must be used. Ap­prox­i­mate cost is about $35 plus GST (again).

Mis­cel­la­neous items. Lawyers will also charge you for other costs such as postage, file ma­te­ri­als, pho­to­copy­ing, tax charges and file ma­te­ri­als. Reach into the wal­let for an­other $40 plus GST.

There are sev­eral other costs that will be in­curred: prop­erty taxes, pos­si­ble in­ter­est and Cana­dian Mort­gage and Hous­ing Cor­po­ra­tion fees. Con­se­quently, you may have to pay a cer­tain per­cent­age of prop­erty taxes ow­ing, or you can (for a small fee) as­sume tax pay­ments on the TIPPS plan. And if you’re get­ting a new mort­gage, pro­cess­ing time at land ti­tles (which takes two to four weeks) may cost you in­ter­est that must be paid to the seller.

Fi­nally, there’s the CMHC to con­sider. If you don’t have a 20 per cent down pay­ment, you’ll have to pay a per­cent­age on the mort­gage prin­ci­ple sum. So, if you buy a home for $200,000 and put down five per cent ($10,000), mul­ti­ply the prin­ci­ple of $190,000 by (in this case) 3.15 per cent. That comes to an­other $59.85 that you’ll have to pay ev­ery month to in­sure your mort­gage.

If you’re buy­ing a starter home on a thin bud­get it’s es­sen­tial to know what costs you’re deal­ing with. Un­der­es­ti­mate them, and you could be in over your head be­fore you’ve even be­gun.


Janna Lu­nam is happy in her new con­do­minium, but she got an un­wel­come sur­prise when high clos­ing costs forced her to dip

into her down pay­ment and as­sume a higher mort­gage.

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