Closing Costs with Home Purchase
When purchasing a home you will have other expenses aside from your mortgage down payment, referred to as ‘mortgage closing costs’. It is important that you become familiar with these expenses before your transaction closes. Below is a summary of what to expect – however, upon your approval and accepted offer to purchase, you will receive a completed worksheet detailing what expenses to expect.
- Legal Fees – including disbursements $800-$1000 depending on the lawyer you choose.
- Adjustments – There are two types of adjustments interest adjustment and prepaid services. Interest adjustment is the calculation of interest from the completion date to the date the first mortgage payment is calculated from. Example: your home purchase closes March 17 you have chosen to pay monthly. In this example the interest adjustment date would be April 1 st as this is the day your monthly mortgage pmt would start being calculated. Your first full payment being made May 1. Therefore the interest adjustment is the sum of interest due from Mar17- April 1. Pre paid services include what the current homeowners have already paid, such as property taxes, and you will be charged a portion of these prepaid expenses on prorated basis.
- Appraisals & survey – an appraisal is for your protection and determines value. Most appraisers charge between $185-350. A survey certificate verifies that the home is within its property lines. As most people already have a survey you may have your realtor request this document. The cost for a survey is approximately $300.
- Home inspection – this is not required by the lender but it is advisable that you have one done. Check with your realtor or check the yellow pages and find a professional inspector. They will go through the home with you and inspect the home for any structural defects. The cost for this service ranges from $200-300.
- Home fire insurance – this cost will vary and is hard to quote as it is based on replacement value. After you have successfully found a home it would be advisable to call a local insurance company and have them determine the cost of this insurance.
- HST and New Homes – unfortunately HST is applicable to new homes and this tax is 13% of the purchase price. If the home will be your place of residence you may qualify for a partial rebate depending on what the sale price is.