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Closing Costs to Budget for When Buying

28 December, 2016

 

Real Estate is the only tangible investment where you can literally live in it while accumulating equity.

Many home buyers are surprised from unexpected fee. Closing costs are not limited to one-time items such as lawyer fees, land transfer tax if applicable, adjustments, etc.

Closing costs are fees that are paid at the closing of a real estate transaction for your home sale to be complete. It can be incurred either by the buyer or seller. On the closing date, the title to the property is transferred to the Buyer and the Buyer takes legal possession of the property.
According to the CMHC, you should have an amount equivalent to about 1.5% to 4% of the purchase price for the closing costs. Please consult with your lawyer for a more accurate estimation of your closing costs depending on your situation.

Some of the closing costs could include:

Lawyer’s Administrative and Disbursement Fee – When making a real estate investment, you want to ensure that you are protected and that the deal closes. Lawyer’s fee must be paid upon closing and costs a minimum of $500. It depends on the extent of services provided.

Moving Costs – Moving costs depend on the distance of the move and the amount of items to be transported. It could include truck rentals, hiring moving help, etc.

Property Taxes – Residential property taxes are calculated by multiplying your current value assessment by the annual tax rate.

Land Transfer Tax – Land Transfer Tax, if applicable, is payable by the Buyer and varies depending on the province you live in. In Ontario, first-time homebuyers may be eligible for a refund of all or part of the tax. The maximum amount of the refund is $2,000.

Home Inspection Fee – A home inspection is a report on the condition of the home. Home Inspection generally costs around $500, depending on the complexities of the inspection.

Hook-up Fees – Service charges applied to hook-up utilities such as electricity, gas and telephone service.

Title Insurance Fee – Title Insurance Fee, if applicable, is cost associated with assuring of the ownership in the land.

Home Insurance Fee – To protect your home and contents.

Appraisal Fee – An appraisal is an estimate of the value of your home.

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