What are Home Buying Closing Costs?
They are defined as "the expenses, over and above the price of the property that buyers and sellers normally incur to complete a real estate transaction."
Closing costs for buyers and sellers can vary, so make sure you pay attention to who is responsible for the payment of each item.
There can be a number of home buying closing costs that need to be considered when planning for the purchase of a new home.
They may not all be applicable to your purchase, however it is good to be prepared 'just in case' so that there are no surprises when the time comes to close on your purchase.
If you are unsure of what you should expect, you can ask any licensed Real Estate Agent or Mortgage Broker for guidance.
The Canada Mortgage and Housing Corporation (CMHC) is also a great reference to uncover some of the home buying closing costs.
Check out their website.
In the mean time, here is a list of costs that you may run into.
1. Legal Fees: On average between $500 and $1000 across Canada
2. Land Transfer Tax: Ranges from 0.5% to 2% of the property value
3. Property Appraisal: Usually around $300 - $500
4. Home Inspection: Depending on the size of the home ranges from $350 - $600
5. Survey/Title Insurance: If required the survey is usually paid for by sellers however if it’s not done by the seller it can cost anywhere from $1,000 and $2,000. Often time’s lenders accept title insurance instead of a survey which will cost around $300 depending on the property type and price
6. Mortgage Insurance: Between 1.0 % and 2.75% of your mortgage
7. Down Payment: The minimum down payment in Canada is 5% although the typical down payment ranges from 5% - 20% of the asking price. Most try for 20% or more to avoid paying CMHC Insurance
8. Financing Fee: Most lenders waive mortgage application fees. Clients with poor credit records may be asked to pay the broker’s fee which is 2% of the mortgage amount
9. Property Insurance: Lenders require property insurance on your home. It must begin on the day of closing and can range from $700 - $900 per year for basic coverage
10. Adjustments: If hydro, water and property taxes are paid past the closing date you will have to reimburse them for any costs they’ve paid. It would probably be safe to set aside a few hundred dollars to cover this just in case
11. Moving expenses: These costs will vary. Make sure you shop around to be sure you’re getting the best prices. It is beneficial to start looking into this so that you have time to find a service you’re comfortable with
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