CLOSING COSTS TO CONSIDER

People are always talking about the "hidden costs" when purchasing a home.  To help clarify what these costs look here are some items you should consider when budgeting for your closing costs. 

Appraisal fee - Mortgage lenders will usually loan a percentage of the home's purchase price or the market appraisal of the property, whichever is lower. The appraisal is either done by someone on the lender's staff or by an outside professional approved by the lender. The cost of the appraisal is often the responsibility of the home buyer.

Application fee - Find out whether or not your lending institution charges to process your mortgage application. In many cases, if you are dealing with a bank that you have other accounts with, they will waive the application fee.

Land survey fee - Lenders require a plot plan or survey of the property you intend to buy. On properties located in subdivisions in urban areas, lenders will often accept an existing survey, depending on when it was done. However, if there is no existing survey, be prepared to pay a substantial fee for a new survey.

Title Insurance - You should consult with your lawyer for pricing, and further clarification.  It is however a one time fee paid to insure clear title.  Often if you have title insurance Lenders will waive having to have a survey for the property.  This is a small price to pay for peace of mind.                                                                                                                                                                                                      

Home inspection fee - Many homebuyers choose to have a home inspection done prior to finalizing their offer to purchase. Some lenders require a professional home inspection as well.  

Legal fees - You will need to pay your lawyer to arrange your mortgage as well as for "disbursements" such as title search, drawing up the title deed and preparing and registering the mortgage.

Land transfer tax - This tax is payable by anyone who purchases property in Ontario. A good guideline to calculating this is 1% of the purchase price less $275.  

GST - If you are buying a new home, you will be required to pay Goods and Services Tax on the price of your home. GST does not apply to most resale homes.

Insurances - There are several types of insurance that may be required when buying your home. If you are arranging a "high-ratio" mortgage (less than 25% down payment) you will need to purchase mortgage insurance. Mortgage lenders require you to carry fire and extended coverage insurance that exceeds the amount of the outstanding balance of the buildings. Other insurance you may want to consider include title insurance and life insurance.

Other costs - You will likely have to make property tax adjustments and interest adjustments on utility bills, heating oil etc. Ask your REALTOR^® to explain these additional costs so you have no surprises on closing day.

Maintenance and utility costs - Finally, be sure to budget for heating, electricity, water and any immediate renovations you may have planned. It's a good idea to put aside any spare cash and contribute regularly to a maintenance fund so you will be prepared for any repairs or upgrades you need to make along the way.