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When it comes to closing costs it can be hard to discern what’s a “real” cost and what’s padding or part of the cost of doing business. While you won’t be able to get much wiggle room with your costs, you are going to be able to gain a better understanding of how it works. It’s important to know that costs will be different every time you buy, depending on the cost of the property, the type of property (luxury real estate, agricultural, residential, corporate, etc.) and even the time of year that you buy. Why do Fees Vary so Wildly? Fees vary wildly from area to area because each region will have its own rules. Some major metropolitan areas will have Land Transfer Taxes (and at different rates in each city) that you have to pay, while others won’t have them at all. Some will require the presence of an attorney to complete the real estate transaction, others won’t. It’s important to know what terms you’ll have to satisfy in your area to complete the sale. Here is a breakdown of fees you can expect as part of your closing fees: Property Taxes: These will vary, and can get quite high if you’re buying luxury homes for sale. Tax rates are different in each area; it pays to research and figure out how much a given area is going to cost you. You may be on the hook for this year’s taxes and a portion of next year’s taxes depending on when you buy. Legal Fees: It pays to lawyer up when buying a home – it’s imperative that you have legal counsel to look over your mortgage documents and help you find out what you need to do to make sure that the deal is on the level. The last thing you want to do is get stuck with a home or a mortgage that isn’t best for you. Lending Fees: Everything from Title Insurance to points added onto your mortgage will be part of the closing costs. You’ll also need your down payment ready to go – usually in the form of a cashier’s cheque and not a personal cheque. There are other kinds of fees, but these are the major three you’ll find. You’ll also want to look at things like Land Transfer taxes to see how much that will add onto your closing costs. Closing costs should in general be 5% or less of the cost of the home, plus however much percentage wise you’re going to put down as part of your deal. This means you’ll want 25% available for the cost of the home unless you have some sort of private mortgage insurance arrangement ahead of time. Once you know how much you need, you’ll want to talk to your lender and get an exact estimate from them about how much you need to bring with you at closing. Sometimes things can change quickly as you approach closing a property so it’s important to stay in contact with your lender as much as possible the week before closing. The Goodale Miller Team is the #1 team in Canada for Century 21 8 years running. Specializing in Oakville luxury real estate, including Lakefront homes, infill building lots, condominiums and more.
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