The joy and excitement of buying a new home is unparalleled. After all, home ownership is the pinnacle of most people’s dreams. Buying a pre-construction home can be even more exciting as it gives you the opportunity to customise your own home. Unfortunately, most people that buy pre-construction homes are caught unaware by closing costs they were not aware of. These hidden closing costs vary greatly depending of several factors. For example, the value of the home has a bearing on the closing costs. Moreover, whether you are a first-time home buyer also impacts the closing costs in a massive way. Read on for some of the pre-construction closing costs you should know about.
Pre-construction closing costs
What exactly are pre-construction closing costs? Pre-construction closing costs can be viewed as any extra fees that you will have pay outside of your mortgage and down payment. Pre-construction closing costs vary greatly based on each property, area and builder.
To start with, pre-construction homes are subject to development levies. Most real estate experts generally agree that you should budget 2 – 4 per cent of the purchase price to cater for closing costs. Situations vary greatly among homebuyers; thus, it is important to have your real estate lawyer go over the documents to ascertain any applicable fees. When you are buying a pre-construction home, make certain that there is a cap on development charges. This is essential to help you avoid an unpleasant surprise at closing.
Another significant closing cost associated with pre-construction homes are various taxes. The main taxes on pre-construction homes are taxes for land transfer. Taxes for land transfer are generally calculated based on a percentage of your total purchase price. Keep in mind that land transfer taxes tend to run into thousands of dollars. This essentially means that there will constitute a huge portion of your closing costs. With this in mind , it is paramount that you are aware of the various taxes that you are obligated to pay.
Another equally important cost that you will have to prepare for are lawyer fees. Legal fees do not come cheaply so you will need to prepare yourself financially to meet this cost. The need for a real estate lawyer to guide you through the purchase of a pre-construction home cannot be stressed enough. After all, your lawyer will conduct a title search, as well as preparing a statement of adjustment. Moreover, your lawyer will go through any documentation and ensure that it is compliant with the law. In addition, your lawyer will review all forms and contracts and explain everything clearly to you.
The pre-construction home buying process is quite complex, but equally exhilarating. When you undertake sufficient research, you can simplify the entire process and ensure everything goes smoothly. With this in mind, find the best real estate agent to meet your need sin the most satisfactory manner. In addition, identify the right lawyer and pre-construction project to avoid any complications.