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BUYING A FIRST OR NEXT HOME
Closing Costs for New Home Buyers
Canadian homebuyers need to remember that they don’t get mortgage funding until they’ve closed and they can’t close until they’ve paid all their closing costs. A lot of first time home buyers are shocked by how fast closing costs can add up. While it varies, home buyers should expect closing costs to equal 1.5 percent to 4 percent of their home’s purchase price.
Mortgage Loan Insurance Premium
If your down payment is less than 20 percent you will have a high ratio mortgage loan insurance premium which will be added onto the mortgage.
Home Insurance
Get your potential new home insured as soon as possible. You need it insured before you can move in and the lender will demand you have it.
Title Insurance
As you can see buying a home means lots of insurance. Title insurance may not be required but many lawyers and lenders recommend it. It will save you from fraud and future troubles with your title.
Mortgage Appraisal Fee
The lender will want to know that the home you want to buy is actually worth the price you’re paying for it. That means in most cases you will need to pay to have the home appraised.
Home Inspection
Is your dream home a healthy house or a hovel about to fall into major disrepair? To determine the state of your new abode you’ll need it inspected. This is especially true of older homes.
Taxes
Depending on where you are in Canada it’s called a property purchase tax, a deed registration fee, a land transfer tax, or a tariff. Regardless, it’s a tax and it’s going to be expensive.
Hire Lawyers
Buying a home is a huge deal and a major transaction. It’s a good idea to employ the services of a lawyer or notary. While it depends on the transaction this cost is likely to be relatively inexpensive.
Misc. Costs
Other possible closing costs include reimbursement of pre-paid bills by the previous owner such as property tax or utilities. You should also be aware of interest adjustments as it relates to the day of the month you close. Finally, be honest with yourself and your pocketbook when it comes to moving expenses.
Consult Experienced Mortgage Planners
Don’t get surprised by closing costs. An experienced mortgage planner can help you accurately estimate your closing costs as well as answer any questions you may have on the subject.