It is widely known that venturing into home ownership is one of the largest investments you will ever make. You do your research to find out how much it will cost to buy a house, determine what you can afford, and set a monthly budget to help you stay on track. From your deposit, to property insurance, to title insurance to lawyer fees, you know what you need to prepare for, but do you know what they all mean? We don’t want to keep you reading all day so we won’t dive into them all just yet, but now is the perfect time to dig a little deeper, and find out exactly what are closing costs.
Once your home purchase is finalized, there will be some additional costs you should be prepared for called closing costs. Typically, closing costs can range from 1.5% to 4% of the selling price, and are often the legal and administrative fees you are required to pay at the time of closing. Some examples of closing costs are listed below:
What are Closing Costs
EVERYTHING YOU NEED TO KNOW
Home Inspection Fee
We have shared the importance of a Home Inspection many times. Although it will cost you in the beginning, it can save you a lot of money should there be any serious problems with the home.
Mortgage Default Insurance
If you put less than 20% down on your new home, you will be required to buy mortgage default insurance to protect the lender.
Land Transfer Tax
Land Transfer Tax is the tax you pay when you buy land or interest Canada. This includes any buildings, buildings to be constructed, and fixtures and is calculated as a percentage of the purchase price of your home.
When determining what your closing costs are, it is important to keep in mind the legal fees you will be required to pay.
This cost covers the estimate on the value of your home and certifies the lender of the resale value.
If the previous owner of the home has already paid the property taxes for the year, you may be required to reimburse them for the amount that has been paid.
These are just a few of the costs you should be prepared to pay, but if you would like a list of exactly what you can expect, your RE/MAX agent will be able to help! There are some costs that will be dependant on the type of property you are purchasing, and some may be worked into your negotiations with the sellers.