Buying a house can be one of those dreams which you may have had since a long time. But the whole process in itself is more complicated than you can think. Especially when it comes to its cost. No matter whether you are buying a house or selling it, there are a few things related to the cost of the house which most of you may not be aware of! These are a few hidden traps which may end up costing you a lot more than the original price of the house.
So make sure that before buying houses you take consider all of the points that have been listed below and come to the final pricing of the house!
For the buyers –
- Land transfer tax- In many major cities land transfer tax is a common thing and is also sometimes known as property purchase tax. This is calculated in terms of the percentage value of the purchase price. And also the formula may vary from one city to another so make sure that you check this one out before finalizing the cost of your house.
- Adjustment costs- These are those prepaid costs which a vendor pays so that it can be reimbursed at the time when the possession is taken over by the buyer. It includes property taxes, gas charges, prepaid water etc.
- Mortgage cost- Although these days mortgage are not charged by a majority of banks but it is always safe to check for it. You must verify whether the banks are charging a free for setting up the mortgage or you can always do one mortgage related appraisal. Also these mortgage insurances are applied to the extended amortization ones which are over the time span of 25 years. Also you should note that the premium increases by 0.2% everytime the amortization period extends for extra five years.
- Home insurance- Home insurance are yet another addition to the total cost of your house. Although it is necessary and you should totally go for it. Now the cost may vary which depends from company to company and also on the coverage area.
- Legal costs- Now the house sale also generates a slew of legal documents which the lawyer’s processes. According to the law, a maximum that you can be charged by your lawyer is at most 1% of the purchase price. And after that the lawyer all the necessary document of the house.
- Title insurance- Although it not compulsory but is still recommended by many lawyers so that you be protected against mortgage fraud or identity theft issues.
For the sellers –
- Realtors’ commissions– When it comes to big fee sellers, they are required to pay a commission fee for both themselves and the buyer’s realtors. The cost is equal to 2.5 of the house price for each thus in total it cot 5% of the house price. GST is also added to it.
- Legal fees- This is charged by the lawyers whose job is to discharger the title and mortgage, verify all the prepaid expenses and also for the handling of the actual transaction. In addition to it disbursement charges are also added to it.
Thus depending on whether you are buying a house or selling one you may have to consider these additional charges. But make sure you do all the proper research before paying for any of these charges as it varies one city to another.