Buying a Home – Hidden Closing Costs

Buying a Home will always have hidden closing costs.  It is important for home buyers to be aware of all the possible expenses that maybe incurred when purchasing a new home.  Money has to be budgeted and set aside to pay these required expenses.   Don’t rush out and buy new furniture or other goodies for your new home until all expenses have been paid.

Closing Costs – This is a general term used to describe all of the fees paid at the closing of a real estate transaction. Unfortunately, there are a lot of them, including mortgage fees, title insurance, utility fees, surveys, notary fees.

Home Inspection Fee –  Your typical home inspection fee will range from $400 – $600.00 and you will have to sign a waiver if you don’t get one.  You have to be extremely brave or naieve not to get a home inspection prior to purchasing a home,  the downside can be a very expensive lesson for you and your family.  If you want to know more about Home Inspections call Roger Frost at Barrie Home Inspections. ( 705-795-8255 )

Home Insurance – If you are a first time buyer this will be a new expense for you.  Home insurance will typically run from $1200.00 per to $1800.00 depending on size and extras in a home.

Land Transfer Tax – Calculated as a percentage of the purchase price of your home, all provinces have a Land Transfer Tax (LTT) payable on closing, with the amount varying in each province. Some cities, such as Toronto, also have a municipal LTT.

Legal Fees and Disbursements – You can expect to incur a minimum of $500 (plus GST/HST) on legal fees, which account for the preparation and recording of official documents. 

Title Insurance – Today, most lenders require title insurance to protect against losses in the event of a property ownership dispute. This is purchased through your lawyer/notary and costs $100 – $300.

Septic tank – If the house has a septic tank, it should also be tested to ensure it is in good working order. Once again, you can negotiate the cost with the previous owner and list it in your Offer to Purchase.  Typically around the Barrie area a seller will agree to have septic tank pumped prior to closing. ( you can request that the septic tank pumper inspect and give a written assessment at that time )

Water Tests – If the home has a well, you will want to test the quality of the water and ensure there is an adequate supply, as well if the water is potable. You can negotiate these costs with the previous owner and list them in your Offer to Purchase. ( 2 types of wells, a shallow well when pump is in house and drill well where pump is installed in well casing )

Real Estate Commision – This fee is paid by the seller, there is no cost to the seller.

Closing costs are the costs associated with legal and administrative actions that occur when a person buys a home. Closing costs can run anywhere from 1.5% to 4 % of the purchase price of the home, depending on the location of the home and the various administrative actions that occur during the sale process. Each home purchase is different, so closing costs are different every time.