Closing costs may vary when you buy a new house or refinance your existing home. Your mortgage lender will provide an estimate of the closing costs associated with your real estate transaction, but having a clear understanding before you buy will offer peace of mind because there will be no unexpected surprises
Closing Adjustments
There are a number of property that the seller may have prepaid and will need to be reimbursed for by the buyer. They include:
- municipal property taxes
- utilities such as heating, hydro and water
- condo maintenance fee (if applicable)
Legal/Notary Fees and Disbursements
- The lawyer/notary reviews Offer to Purchase, searches Title, draws up mortgage documents and looks after closing details
Appraisal Fees
- appraisal of property is required to confirm market value before closing of your mortgage. The costs for this ranges between $275 – $400.00 . If your mortgage is insured by CMHC or Genworth (you have less than 20% downpayment) then there is no appraisal fee required.
Land Transfer Tax
- Land Transfer Tax fee is charged to the purchaser when a property changes ownership. This is generally the largest portion of closing costs on a resale home. It can range from 0.5% to 2% (varies by province and municipality)
Interest Adjustment
- you will need to pay any interest accrued between your closing date and your first scheduled mortgage payment. This has to be paid on the Interest Adjustment Date and can varies by closing date and type of payment frequency (weekly, biweekly, monthly)
Title Insurance Fee
- Most lender today require Title Insurance, in lieu of a survey certificate. Title Insurance protect against fraud, forgery, title defects, and survey problems. Costs runs about $165 – $225.
Home Inspection Fee
- A home inspection provides the purchaser with a clear understanding of the physical condition of the home in order to make a well-informed decision. The written report discloses any deficiencies as well as noting positive features.
Property/Fire Insurance
- Proof of fire insurance is required by the closing date. It must at least cover replacement value of home and contents.
Estoppel Certificate
- Is only required when purchasing a condo. It outlines a condominium corporation’s financial and legal state of affairs.
Author- Lisa Alentejano
Mortgageplayground's Blog 