Posted by genieSABRE on Sep 13, 2011
What Are Closing Costs?

What Are Closing Costs?

How much money do I need to close my
purchase?

Source: Hannif Highclass
Publish:My Blog: 09/07/2011
 

Home Buyers Closing Cost

Closing Cost

are additional costs over and above the price of the home, the list of charges that your lawyer presents to you on the closing date. Closing Costs are a miscellaneous collection of fees and charges that a buyer of property must pay on or before closing of the transaction at the lawyer’s office.

According to CMHC and GE Capital, one should have, in addition to the down payment, at least 1.5% of the purchase price for closing costs (we say 2-2.5%, just to be on the safe side).

Depending on the type of property and the nature of your deal these may include but are not limited to the items described below. Check with your Realtor to make sure you know what costs to expect when you buy a home.

Title Insurance:

is an insurance policy covering the condition of title or ownership of real property at the time the policy is issued and is used to provide ownership protection for a purchaser against losses or damages suffered as a result of title problems. Title insurance is obtained, typically by the purchaser’s lawyer prior to closing a purchase for the benefit of the purchaser. Estimate about $150 for a condominium and $200 to $400 depending on the price of the home.

Land Transfer Tax:

Every home buyer has to pay Provincial Land Transfer Tax. but if your property is in Toronto then you have to pay an additional Municipal Land Trans Tax. Double ouch!. Remember this MLTX is for Toronto only and not for those outside Toronto Propertie. Click Here: Land Transfer Tax Calculator Anyone who buys a house in Toronto has to pay an additional land transfer tax. It’s a sliding scale again and the top rate of 2% also kicks in on any dollar spent above $400,000. Double ouch. First-time home buyers can get another rebate on this tax as well

Legal Costs and Disbursements:

A lawyer or notary will charge a fee for their professional services involved in drafting the title deed, preparing the mortgage, and conducting the various searches. The disbursements, on the other hand, are out-of-pocket expenses incurred, such as registrations fees, photocopies, searches, supplies, etc., Approximate cost: $400 to $600 AVERAGE $500.

Home Insurance / Fire Insurance:

All mortgage lenders will require a certificate of Home / Fire Insurance to be in place from the time you take possession of the home. The amount required is generally at least the amount of the mortgage or the replacement cost of the home. This cost can vary on the property size and extras being insured, as well as the insurance company and the municipality. The cost can vary anywhere from $250-$600 for most properties.

Mortgage Application and Processing Fee:

On a high-ratio insured mortgage (mortgages above 75% of the purchase price), the mortgage insurer (CMHC or GE Capital) charges a fee of $165-$185 for applying and processing the file, as well as appraising the property. On new homes, this fee drops to $75

Mortgage Appraisal:

The home appraisal provides the lenders with a professional opinion of the market value of the property. This cost is normally the borrower’s responsibility and it ranges as low as $100 for a drive-by appraisal to as much as $250 for a full appraisal. Occasionally, the costs could be slightly higher for larger, custom-built homes, or homes in remote parts. As a Buyer – Try to get the lender to waive this. – If you are a good negotiator – Good Luck to you! AVERAGE: $200

Home Inspection:

Prior to buying a home, you should have a home inspection performed to identify any significant structural, electrical or plumbing problems with the home. Some lending institutions require that you have a home inspection completed before approving financing. Approximate cost: $200 – $450 tax. New home buyers may not worry about it, but a definite must for buyers purchasing properties older than 8 years. When hiring a home inspector, make sure the inspector has liability insurance, just in case a mistake is made. AVERAGE: $275

Status Certificate:

As a Home Buyer, if you are buying a condominium townhouse or a apartment, then need to request a Status Certificate. This document provides detail on the Condo Bylaws, Rules and Regulations, as well as Finances. Any Insuite restrictions or common element restrictions are also detailed in the Status Certificate. Most importantly, it includes information on the condo’s Reserve Fund, which is the amount the condo corporation has set aside to cover unexpected expenses. The Status Certificate is usually paid for by the seller. Approximate cost: $100.

CMHC / GE Insurance Premium / Mortgage Loan Insurance:

is typically required by lenders when home buyers make a down payment of less than 20% of the purchase price. Mortgage loan insurance helps protect lenders against mortgage default, You have the option of adding the premium to your mortgage and amortizing it over the term of your mortgage. In the latter case, it does not form part of your closing costs as you will pay it over the term of the mortgage. As with any insurance, there are insurance premiums to be paid. The amount of the premium varies and can range between 0.65% and 2.75% depending upon how much of the purchase price/home value is financed with a mortgage loan. Mortgage loan insurance is not to be confused with mortgage life insurance which guarantees that your remaining mortgage at the time of your death will not be a burden to your estate. Please click here to calculate how much your premium will be if you are intending to put less than 20% as a down payment.

Provincial Sales Tax of 8% (P.S.T.)

New Home purchases are subject to HST but may qualify for an HST rebate. Resale homes are sold without HST. Land may be exempt from tax, but realtors and other professionals must charge HST on the purchase price. However, if the home ids going to be your primary place of residence, it may qualify for a partial HST rebate, depending on sale price. You do not have to pay HST on the purchase price of a used residential home. Revenue Canada defines “used residential property” to include a previously occupied house, condominium, summer cottage, vacation property or non-commercial hobby farm.

 

RELATED TOPIC:

TREB Urges City Hall To Repeal Land Transfer Tax

Join us today to take an active part ” SAY NO TO STATUS QUO “ 
Fill out a form and write to the City Council & Mayor Ford



REMEMBER: Real Estate

Home Owners: If, you already own a home – good for you!

May you be blessed with
warmth in your home,
love in your heart,
peace in your soul
and joy in your life.

However, if for any reasons you do intend to move due to upsizing, downsizing, moving to different town or ??? —
genieSABRE recommend you check out our main web site. You will not be disappointed!

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Real Estate Investors: Home ownership should be your 1st. priority. If you own your own home – Good for you. But now is the time to take that second step – Buying Rental Property for investment. Commercial, retail or home.
genieSABRE has extensive knowledge and experience in this field. As a developer of commercial /retail plazas (built 3 so far) and owners of residential rental homes, we can guide and advice you as to what is best for you according to your personal financial position.

Call: Hannif Highclass @ 416.444.4252

http://www.geniesabre.com

 

 

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