When you buy a brand new home from a builder, the cost typically includes the base price of the home (and lot) plus the price of any upgrades you choose. There are additional costs that you should be aware of, from legal fees to mortgage premiums, which can apply to a new home purchase.
Ask your builder and your mortgage lender about the costs that will apply to your situation; that way, you can budget for them and proceed with confidence, knowing that you will not be faced with unexpected last-minute expenses.
Sales tax: When buying a newly built home find out up front if the prices quoted by your builder are inclusive or exclusive of tax and the rebate.
Mortgage insurance: A high-ratio mortgage (75% or more of the total purchase price of the home) must be insured against default. There is a small application fee as well as an insurance premium which is based on the size of your down payment and can be paid up front along with your property taxes or added to the mortgage amount.
Appraisals: Your mortgage lender may ask for a property appraisal, which is normally needed for a brand new home that’s already built.
Surveys: Your lender may also require a property survey to verify boundaries, measurements and structures, and to identify any easements, rights-of-way or encroachments. Alternatively, title insurance may satisfy the lender’s requirements.
Water certification: If your new home comes with its own well, your lender may require the flow and quality of the water to be tested and certified.
Legal services: The purchase of a newly built home requires the services of a lawyer (or notary) to search the title, draw up mortgage documents, register new ownership and liens and look after other closing details such as disbursement of funds. You may want your lawyer to review the contract, or sales agreement, between you and the builder before you sign it. Legal costs vary considerably, depending on lawyers’ practices and the complexity of your transaction.
Home insurance: Your home must be fully insured before mortgage lenders can release the funds for your purchase. This protects both you and the lender.
Moving costs: Determine the work you are willing to do yourself, from packing to unloading and setting up in your new home.
Appliances, furniture, drapery: Does the home come with appliances or will you need to buy new ones? Will you need new blinds and drapery for the whole house? Would this be a good time to upgrade your living room set? It’s a good idea to budget for these things in advance. Talk to your lender about financing options that can help you afford the things you need to get started in your new home.
Home maintenance equipment: Consider the equipment you need to maintain your home properly throughout the seasons, from lawnmower to snowblower. Will you be able to purchase equipment as the need arises? Can you include it in your initial investment in your home, or will you require additional financing?