8 Closing Costs to Remember When Buying a Home

By Michelle Moon

When buying a home it’s not only important to look at the purchase price of the home but to also factor in all of the closing costs for the home. You don’t want to be surprised with additional required fees that can quickly add up! Remember to consider these 8 closing costs when buying a home.

1. Land Transfer Tax
When a home transfers owners, a land transfer fee is charged.  This fee ranges and is dependent on your homes value.  Typically, this is your largest expense for closing costs.  If you are a first time home buyer you can qualify for a rebate up to $4000 in Ontario.
Use the LTT calculator here: http://www.trebhome.com/index.php/buying/calculators

 2. Appraisal Fee 
An appraisal is a valuation of a property. Depending on your lender, they may ask you to have your home appraised.  Costs do vary and can typically be anywhere for $200-$400.

3. Legal Fees
A real estate a lawyer is equipped to prepare and review documents relating to real estate such as purchase agreements, mortgage documents, title documents, and transfer documents.  The will protract your interest throughout the process.  You will have basic legal fees with disbursements and added services on top.

4. Home Inspection 
A home inspection is an objective visual examination of the physical structure and systems of a house, from the roof to the foundation. The standard home inspector’s report will cover the condition of the home’s heating system; central air conditioning system (temperature permitting); interior plumbing and electrical systems; the roof, attic and visible insulation; walls, ceilings, floors, windows and doors; the foundation, basement and structural components.

Fees range from $350 and up.  Additional fees may apply is you require a septic, well or a wood burning fireplace inspection.

5. Home/Fire Insurance 
Insurance costs depend on coverage but your lender will require proof that the property is insured prior to closing.

6. Pre Paid Costs 
Some sellers may have paid for utilities and taxes in advance, therefore you will be required to reimburse them from your move in date onward.  This will be completed at the lawyers office on the statement of adjustments.

7. Tax on Mortgage Insurance 
Lenders will require you to obtain mortgage default insurance if you have less than %20 down payment.  This insurance can be built into your monthly mortgage payments, however you will need to pay the PST on closing.

8. Title Insurance
Title insurance protects property buyers and mortgage lenders against defects or problems with a title when there is a transfer of property ownership. If a title dispute arises during a sale, the title insurance company may be responsible for paying specified legal damages, depending on the policy.  Fees range from $150-$350 and can be set up with your lawyer.