Closing Costs – What to Expect
Closing costs are a part of any real estate transaction. Depending on the situation, your REALTOR® can negotiate some of these costs with the seller, perhaps to speed up the sale. Usually though, closing costs are the responsibility of the buyer. Here are a few that you should expect and budget for.
Getting a credit report is necessary to take care of the mortgage pre-approval process. Sometimes the cost is added to the mortgage application. At others it is added to the other closing costs during the sale.
Property appraisals average around $300 and are the responsibility of the buyer. CMHC requires one for mortgage insurance, to make sure the property is worth what you are paying for it. Payment can be at any time during the home buying process.
A title search runs $15 and searches for liens or other claims held against the property. After this you can purchase title insurance to cover you against claims against your future home. Title insurance usually runs about one percent of the property value.
Recording and Documentation Fees
These fees cover the legal filing of the Land Title on your property purchase. Fees vary according to jurisdiction and the type of procedures involved.
Property Taxes, Condo Fees
The amount of property tax you owe once you take possession depends on the date of possession. The amount is pro-rated between both buyer and seller. Condo fees are similarly divided for the year. This includes yearly insurance fees, often overlooked.
As a general rule of thumb, budgeting roughly 1.5 percent of the home’s total transaction cost for miscellaneous fees will make sure you are in good shape.