Closing Costs
Important! HST in Ontario applies to many of your closing costs and services associated with buying a house. So pay extra attention and ask extra questions!
There are fees associated with the buying or selling of a home and these are called closing costs. Certain fees are automatically assigned to either the buyer or the seller; other costs are either negotiable or dictated by local custom. In Orangeville, Brampton, Caledon, Mono, Alton and surrounding rural areas, the fees are commonly broken down as follows. I would still suggest speaking with your trusted professionals first though. Lawyers, mortgage brokers, insurance brokers and real estate agents are all apart of your professional team to ensure everything goes according to plan.
Buyer Closing Costs:
When a buyer goes for a mortgage pre-approval, lenders and brokers are required to provide them with a good-faith estimate of their closing costs. The fees vary according to several factors, including the type of loan they applied for and the terms of the purchase agreement. Likewise, some of the closing costs, especially those associated with the loan application, are actually paid in advance. Some typical buyer closing costs include:
- The down payment - at least 5%
- Loan fees (points, application fee, credit report)
- Lawyer fees - usually totalling $800+
- Home Inspection fees - $300-$500
- Appraisal fee from the bank
- Mortgage insurance and Title insurance
- Documentary stamps on the note
Some things you'll need to set up and organize before your move-in date are:
- Home Insurance - most people go with their auto provider which gives them a discount. I can assist with all the unique questions they ask about the house.
- Utility set-up - call Hydro, phone and your gas company and make sure they know your move-in date so your services aren't disrupted
- Canada post - Ensure you put in an address change so all your mail is forwarded to your new house
- A moving truck! Most are busy on weekends and booked solid at the end of the month, so if you can try and make your closing date mid-week and mid-month you'll save some money
- Within 10 business days of moving you must go to the ministry and have your address changed on your license and insurance
Seller Closing Costs:
If the seller has not yet paid for the house in full, the seller's most important closing cost is satisfying the remaining balance of their loan. Before the date of closing, the mortgage broker will contact the seller's lender to verify the amount needed to close out the loan. Then, along with any other fees, the original loan will be paid for at the closing before the seller receives any proceeds from the sale. Other seller closing costs can include:
- Real estate commission
- Transfer taxes
- Documentary Stamps on the Deed
- Title insurance
- Property taxes (prorated)
Negotiating Closing Costs:
In addition to the sales price, buyers and sellers frequently include closing costs in their negotiations. This can be for both major and minor fees. For example, if a buyer is particularly nervous about the condition of the plumbing, the seller may agree to pay for the house inspection.
Likewise, a buyer may want to save on up-front expenditures, and so agree to pay the seller's full asking price in return for the seller paying all the allowable closing costs. There's no right or wrong way to negotiate closing costs; just be sure all the terms are written down on the purchase agreement.
Adjustments:
At the closing, certain costs are often adjusted (or distributed) between buyer and seller. There are time adjustments made to fairly and evenly divide costs such as: utilities or oil tanks. The most common prorations are for property taxes. This is because property taxes are typically paid at the end of the year for which they were assessed.
Thus, if a house is sold in June, the sellers will have lived in the house for half the year, but the bill for the taxes won't come due until the following year! To make this situation more equitable, the taxes are prorated. In this example, the sellers will credit the buyers for half the taxes at closing.
You have a team of professionals working hard for you every step of the way. It's our job! If you would like any assistance or have any questions give me a call anytime! I would love to help make your move easier!
For more information check out this site.
Also take a look at my mortgage calculator and calculate your land transfer tax.
Call me today and "Let's Get Moving!"
Toll Free! 1.800.461.2686 // kari@kariclarkhomes.com
