Don't Forget Closing Costs

Ok, so you've worked your butt off to finally raise a down payment, picked out a reasonable lawyer, and have found a trustworthy mortgage broker. Nicely done! Buying a house now will be a piece of cake. Don’t forget that you will also have, additionally to the ordinary lawyer costs and mover charges, a couple of additional payouts on closing day. If you know about these respective “closing costs” ahead of time, it somewhat makes them easier to swallow. The list that follows covers the usual costs you’ll come across when your acquisition is concluded on closing day.
 
Reimbursement costs.
You will have to pay back the cash that the person selling the house has already paid out of pocket. These costs are now transferable to you, as well the responsibility to pay them in the future, goes to the current home owner, you. In the solicitor’s office, on completion day, you will hear the legendary last words: “subject to adjustments”. Usually, school taxes, municipal levies, utility bills or deposits that might have been paid in advance, will be calculated and are a pretty standard part of the deal. Theses costs to you are fair as you would have paid them anyway. Ask your realtor and or mortgage broker about what adjustment expenses you should expect in your part of the country. They should even be able to tell you if you will be paying or receiving a credit in regards to property taxes, depending on what time of the year the completion day is and approximately how much the amount will be.

Costs to transfer land and taxes.
Whenever a piece of property changes hands and is transferred to a new owner, this tax is paid. The amount paid is based on the value of the respective property. It increases as the market value of the property increases. You can ask your legal representation about transfer taxes in your respective part of the country and get a pretty accurate idea of what you’ll be paying.
 
Home insurance expenses
You will absolutely need to get insurance coverage, such as fire insurance, etc… before you can own the home. The lawyers will make sure the house is protected from peril before changing the ownership. If there is a bank or lender lending on the house, their investment needs to be appropriately protected by insurance. You need to be protected as well, as it is your investment too. Your lawyer will ask you to provide a binder letter before you go in to sign the paperwork. Your insurance company should have no problem faxing it directly to you legal representative’s office.

What about mortgage life and disability insurance?
If you have children or other dependents, you should get mortgage life and disability insurance. Actually, you should get this type of insurance anyway. With disability insurance, if you get hurt, the mortgage will get paid every month until you get better. Make sure you find out from the insurance salesperson about policy limitations, terms and conditions. You don’t want to be left in the dark on details you need to know, educate yourself. With life insurance, should you or your mate meet an unfortunate demise, the mortgage gets paid off in full. With mortgage life and disability insurance, you will sleep better at night knowing that you are protected in case something unfortunate happens. Again, speak to a professional insurance salesperson about what options are available to you. Don’t forget to shop around; don’t just take the first deal you come across.

Home inspections
A home inspection is an important part of buying a new home, especially is it’s used. You want to know that the structure is sound and will be a good home to you for many years to come. You don’t want to purchase a dud that was “patched up” by a scammer looking to make a quick buck. Get the property check out by a professional and get some piece of mind knowing the roof won’t fall down on you while you are sleeping or that the furnace won’t call it quits in the middle of a brutally cold winter night. It is definitely worth the $150 to $450 cost. Remember to call and shop around. Costs can vary greatly.

Get a home appraisal
Your bank or lender might require an appraisal before give out mortgage money. Obviously, they need to know that the house is of greater value than the amount of their money they are handing out, and of course, you pay for this appraisal, as the client. This fee is usually between one and four hundred dollars depending on location and the property itself.

Survey, or RPR
You will probably need to supply a survey and a compliance letter to your bank or lender. The survey specifies the details of the property, measurements, placement, location of the house on the respective land, etc… It is widely known as the “real property report or rpr”. You want to make sure the property is in compliance with the county. The seller usually has these documents handy but not always. You may have to order one and it is usually not cheap. Title insurance is a much better and more affordable alternative. $150 to $300 typically as opposed to $1000 to $2000. Which do you prefer?

Title insurance – a good idea.
Title insurance protects you in case your property has a problem in one or more unforeseeable circumstance. It could be a title problem, an encroachment problem or whatever. You can even get fraud protection. Look online and discuss your various options with a qualified rep. Educate yourself and shop around for price.

Gst.
You can’t get away from this. Sorry. Unless you are buying a used home, then there should be no gst payable. Your local realtor should be able to answer this question for you easily.

Legal costs.
Call around for prices in regards to a lawyer to use. What they charge varies greatly. Again, shop around as I have often seen lawyers that charge as little as $400 to do a close. It’s a cookie cuter system they use, bang, bang, bang, they get them (the deals) done fast and efficiently. Some charge as much as a few thousands bucks. It’s a fairly simple process, done on a daily basis. Why pay too much?