You’ve found your dream home. You’re ready to purchase. You’ve met with a broker. You’ve secured a mortgage. Everything looks great, but before you start packing up your belongings, you need to consider the closing costs.
Closing costs are additional expenses that come with every home purchase. Your broker can guide you through the process and explain each in detail. It is recommended that you budget at least 1.5% of the purchase price of your new home to go towards these supplementary charges.
Avoid unpleasant surprises and sit down with your broker to discuss the following closing costs:
- Land Transfer Tax
Most provinces make use of a land transfer tax. This is charged to you upon closing when the property is transferred to your name. The amount of land transfer tax is not the same for everyone and varies depending on the price of your home. Some provinces offer breaks on land transfer tax if you are a first time homebuyer.
- Mortgage Insurance
Insurance costs can range anywhere from homeowners insurance to default insurance to life insurance. Ask your broker exactly which type insurance you need as you may only need certain ones.
- Legal Fees and Disbursements
You will no doubt use the services of a lawyer to take care of all legal items involved with buying a home. These items can range from preparing the mortgage to drafting the title deed to dealing with prepaid utilities adjustments. Thoroughly discuss these costs with your broker as they can fall anywhere from $800 to $2,000. In some cases, they may be even higher.
- Home Inspection
This is a report that indicates the home’s condition. It costs around $300 and usually it is the purchaser’s job to incur this cost. However, there are instances in which the seller will commission a home inspection and take care of the fee.
- Appraisal of Property
Some lenders need an appraisal report done before they hand over your loan. An appraisal lets the lender know that the property you’re buying is worth what you’re paying for it. Appraisals tend to hover in the $175 range but location and size of the property can make the cost go up.
Northwood’s Mortgage Calculators can help you figure out your budget. Contact one of our experienced brokers or more information about closing costs. They will sit down with you and in explain in detail what’s involved and how they can help.