Knowing how much money you need to buy a home is Real Estate Home Buying 101 – but without this information you can be left unprepared and stressed when the costs arise. I have broken the Real Estate purchase up in to three phases: 1) Upon having an accepted offer, 2) Preparing for closing, and 3) Closing.  Each phase has costs associated with them and the more prepared you are for these costs, the smoother the ride.  This is a list of items that have a COST associated with them so that you know when to have your money ready – do not confuse this with a "TO DO LIST" of moving. 1) Once you have found the home that you like and had an accepted offer, that is when the real cost begins. a) WHAT? Deposit.  WHEN? Within 24 hours of an accepted offer.  HOW MUCH? Typically 2-5% of purchase price payable by Certified Cheque The deposit (Not to be confused with DOWN PAYMENT, we will discuss this later) is a sign of good faith from the buyer to the seller, and is paid to the trust account of the listing brokerage.  There is no real rule to how much a deposit should, and is a term of the offer that is negotiated just like the Purchase Price and the Closing Date.  I have worked on offers with deposits as low as $2,500 for a $220,000 home (around 1%), and as much as $40,000 for a $500,000 home (around 8% during an aggressive multiple offer negotiation).  However, it is typical to expect 2-5% of the purchase price as a deposit.  The deposit will be deducted from your final purchase price, and will go towards your down payment at the time of closing. b) WHAT? Home Inspection WHEN? Typically 5 business days after an accepted offer.  HOW MUCH? Around $300-$500 depending on home inspector and size of home The home inspection is usually done within 5 business days of an accepted offer, and payment is made at the end of the home inspection.  Home inspection prices will vary between companies, but budget up to $500 within 5 days of your accepted offer for this. 2) Preparing for Closing. a) WHAT? Moving Boxes/Tape/Tape Gun WHEN? 2-4 weeks before closing day.  HOW MUCH? $100-$200 – again, depends on how many things you plan on taking with you.  If you have a lot of breakables, then it may add up when you add things like bubble wrap.  Mississauga Cartons offers excellent pricing for moving boxes and equipment if you don't have other boxes lying around. b) WHAT? Moving Truck (DIY) or Hiring a Moving Company WHEN? Moving day.  If you are planning on hiring a moving company make sure you book your date as early as possible, especially if you plan on moving on the weekend (as most people do…) HOW MUCH? Completely depends on how much you need to move and how quickly you want it moved! At one end of the spectrum you can hire a U-Haul for $100, order some pizza and ask some friends to help you out, or you can have a moving company come and package all of your things, move them to the new house and set your new house up for you for as much as $2,500.  Give some thought into how you plan to move and budget accordingly. 3) Closing Day a) WHAT? Down payment minus Deposit WHEN? Closing Day HOW MUCH? Depends on what you negotiated with your bank.  Could be anywhere from 0-100% (typically 5-20%) The down payment is how much of your own money you will be using when purchasing a home, and you will need to come up with the amount, minus the deposit for closing day. For example: Say you purchase a home for $500,000; you have a 20% down payment ($100,000) and with the offer you gave a deposit of $20,000.  The $20,000 will then go towards the down payment of $100,000 and the remaining $80,000 will be paid at the time of closing.  The bank will be lending the remaining $400,000 to come up with the $500,000. PURCHASE PRICE: $500,000 DEPOSIT: $20,000 DOWN PAYMENT: (20% = $100,000) – $20,000 at the time of the offer + $80,000 at the time of closing BANK LOAN: $400,000 =$500,000 b) WHAT? Lawyer Fees + Disbursements WHEN? Closing Day HOW MUCH? Could range from $1,000-$1,500 depending on the lawyer c) WHAT? Land Transfer Tax WHEN? Closing Day HOW MUCH? Depends on the price of your home.  Use the Land Transfer Tax Calculator here to determine how much that would be. This is an overview of expected costs.  It is always a good idea to have a budget for the unknown or "miscellaneous" costs.  As always, it is best to consult with your sales profession when the time comes to making the purchase, but remember that preparation is extremely important in keeping the home buying process as stress free as possible. Until next time, Roy Bhandari (B.Comm Hons), Sales Representative Signature Service/GMAC Real Estate