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Do you know how much CASH you ACTUALLY need on hand to close on a house? - YouTube
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Christina Wyatt:
Hey Everybody, Christina Wyatt here, your
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girl next door financial guide.
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Today I want to introduce you to a special
guest that we have on our channel, Jim Pomeroy
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who鈥檚 a local real estate agent with Coldwell
Banker SuperCity Realty, here, in Nova Scotia.
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Today Jim is going to give us a breakdown
of the cash needed on hand to close a real
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estate deal.
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A lot of people think that your down payment
is going to cover everything moving into your
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home, but that's just not the case.
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And as always, we want you to be fully prepared
financially, so we're going to be digging
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into some of these additional expenses and
closing costs today.
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Jim, can you tell us a little bit about yourself?
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Jim Pomeroy:
Awesome.
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Thank you, Christina for introducing me, as
you said, my name is Jim Pomeroy.
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I am a local realtor here in Halifax, Nova
Scotia, Canada with Coldwell Banker Supercity
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Realty.
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A little bit about myself, I am an avid outdoor
enthusiast, whether it's playing ultimate
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Frisbee, going mountain biking, going camping.
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But the other passion that I have is helping
people reach their goals.
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And today I'm happy to answer your questions
so you can reach your financial goals as well
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as purchase your first home.
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Christina Wyatt:
Well, thank you so much for joining us, Jim.
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I'm excited for us to discuss these costs
and expenses that come up for first time home
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buyers.
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So let's get into that right away.
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So from your experience, what does someone
need to have on hand for cash when purchasing
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a home?
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Jim Pomeroy:
So what first time home buyers or anybody
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buying a home needs to have is first they
need to sit with their mortgage specialist
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or financial planner to figure out a down
payment and what their budget is for that
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house.
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That will dictate the percentage that they'll
need to put down in order to get their home.
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It's
not only the down payment that you need though
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and a lot of people don't realize that there
are some closing costs.
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That can happen in between making that offer
and to getting your keys, which would be,
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pre-closing, what you need on the day of close
to cement.
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And then what would you need post-closing
in order to get your house the way that you
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like it.
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Christina Wyatt:
All right.
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Well, let's dig a bit deeper into these costs
that you just went through.
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So the first one you said was pre-closing
costs.
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What, what would those entail?
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Jim Pomeroy:
Yeah, so pre-closing is the time when you
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make your offer.
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And then when you go from there, you might
put some conditions on there and conditions
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can be things like getting an inspector to
inspect the home.
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So you could be anywhere between about $400,
$500, maybe upwards of $700 for an inspector.
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You would also need to call on a lawyer to
do a review and then any other specialists
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that you need to get in there.
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So they might have to do sewer lateral scope.
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They may want to do a radon test or anything
that you need to pay to make sure you're comfortable
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with the home.
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That can range and vary on whoever you get
for your professionalism.
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Christina Wyatt:
Great.
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So good to know about the pre-closing costs,
because I definitely think that's something
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not talked about enough.
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Closing costs, this one we're a little bit
more familiar with.
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But why don't you give us a breakdown of these
as well?
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Jim Pomeroy:
Absolutely.
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So closing costs is the cash that you need
on hand in order to close your deal and get
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your keys.
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So this could be due just prior to closing
or on the day of close.
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So what you'll do is sit with your lawyer
to decide what is needed to complete the deal.
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They'll let you know things like adjustments
that need to happen.
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So that could be taxes that have been paid.
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Maybe somebody topped up the oil tank and
you're paying the difference or anything that
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might be popping up that you need to do minor
adjustments on what had been paid before,
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but you would take over that cost.
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The next would be any of your fees that you
need to pay out.
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So that could be your lawyer fees.
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It might mean that you pay an appraiser to
do the bank side of things and any mortgage
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fees, like applications, administrative fees
and things like that.
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So you want to ask whoever you're dealing
with upfront, what fees are they going to
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charge you?
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And when do they happen?
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So you can best plan if that is going to be
needed prior to closing, during closing, or
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after?
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Christina Wyatt:
Okay.
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So that's great to know about the closing
cost and it sounds like it's very important
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to have a good team on your side as well that
you can work with.
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So the last one that you mentioned, and I
don't think people talk about it nearly enough,
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is the post closing costs or moving in costs
that you might forget about.
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Can you give us a breakdown of those?
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Jim Pomeroy:
So the post-closing costs that you need is
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when you go through the home, you're going
to start seeing things that you need to do.
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So it might be that you see a bedroom that's
like a beautiful lime green that you want
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to change to maybe an off eggshell white.
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So you want to figure out how much it is going
to cost for that paint.
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Are there minor repairs that you need to be
having to complete?
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Did you want to put maybe a deck on the back
of your house?
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What are those things?
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And you want to put those together and what's
most important to you to get done, right when
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you move in and then maybe what can be done
in the future, six months from now, one year
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from now, so you can plan for that as well.
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And it's always important to have a rainy
day fund.
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Anything can happen with a house and you never
know when you might need a little bit of cash
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to get that major repair done.
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So I highly recommend that you do have some
on hand as well, if you're going into this.
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Christina Wyatt:
Very good points, you might want to keep the
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neon lime wall though, maybe.
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So going through all those different types
of costs, we've gone through the pre-closing
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costs, closing costs and post-closing costs.
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But are there any other hidden costs buyers
should be aware of upfront before going into
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purchasing their first home?
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Jim Pomeroy:
The answer is yes.
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There's always going to be unexpected or hidden
costs when it comes to home ownership.
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How to best prepare for it is to make sure
you ask the right questions.
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So you want to talk to your lawyer.
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You want to make sure you've got all the adjustments
figured out, so oil or taxes or any other
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adjustment that needs to happen.
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The other thing to think about is what are
those account activation fees?
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So if you're setting up your internet, if
you're setting up power, if you're setting
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up any type of an account, they may charge
you a fee to set that up outside of the monthly
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fees.
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So when you are trying to set up those accounts,
ask those questions so you're best prepared
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as well.
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And then really overlook the house, make sure
that you're best prepared when you go through
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your inspections, making a list and a detailed
list of what needs to be done today, what
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can be done tomorrow, and what can be done
long-term.
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Christina Wyatt:
This is some great information Jim.
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I love transparency and knowing all these
details ahead of time so we can prepare for
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them in our cash flow plans and our finances.
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That's great.
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So last question for you.
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How much do you think someone will need to
have on hand in order to close the deal?
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We've gone through all these things, but what
total are they going to have to have in hand
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to be able to get this?
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Jim Pomeroy:
Great question.
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It will be dependent on the type of house
that you buy.
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So whatever the asking price is, or your offer
price will be, is what's going to dictate
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how much cash on hand you need, because you
will need a percentage for that down payment,
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as little as 5% or as much as 20%.
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The next thing you need to do to do your due
diligence, is to interview the experts that
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you're going to use prior to and get all of
their fees upfront so that you know how much
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they cost.
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You can build out that cashflow or that budget
with your financial planner, and you can make
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some good estimates to the area that you're
in to talk to those local experts, to get
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you your best budget moving forward and know
how much cash you need on hand.
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Christina Wyatt:
Thanks so much for joining us today, Jim,
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and thanks for those great tips.
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They were very useful for everybody watching
out there today.
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Please share below in the comments any hidden
or unexpected costs that you might've encountered
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when purchasing a home.
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As always, please subscribe and follow our
channel so you can hear more from your girl
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next door financial guide.
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Thanks so much.
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MANDY - this is the link https://www.youtube.com/watch?v=4syXXpSrJVA
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