Closing Costs - What To Expect
Anytime you enter a real estate transaction, you will have closing costs. Usually these costs are paid by the buyer. In some cases your REALTOR® may be able to negotiate an agreement with the seller so you share the cost. Sellers sometimes agree to this in order to speed up the sales process. Some of the costs you should be budgeting for are listed below.
Credit reports are usually done during the pre-approval process. These reports are necessary for obtaining a mortgage. The fee is either part of the mortgage application or taken care of along with the sale’s other closing costs.
A title search looks into a property’s past to find out if there are any claims or liens against that property. The fee is usually $15. After the search is taken care of you can then buy title insurance, usually about 1 percent of property value. This protects you against claims not uncovered by your title search.
Buyers are responsible for the property appraisal, which usually runs around $300. If you are taking out mortgage insurance with CMHC, a property appraisal is required. This appraisal assures you, and CMHC, that the home is worth what you are paying. Payment for the appraisal is taken anytime during the sales process.
Recording and Documentation Fees
Once you purchase property the Land Title must be legally filed. Fees vary for this service. It depends largely on the type of procedures needed and the jurisdiction of the property.
Condo Fees and Property Taxes
Your date of possession of the property determines the amount of property tax you will owe. It is a pro-rated amount balanced between the buyer and seller. Condo fees work much in the same way, as do insurance fees paid on a yearly basis.
To make things simple, and cost effective, plan on putting aside about 1.5 percent of your future home’s transaction fees for closing costs and other miscellaneous fees that happen to crop up.