Closing costs are, as you probably figured out, paid on closing day when a house is being sold to a buyer. At the end of the buying process, associated closing costs can spring up by surprise, particularly if the buyer hasn’t prepared themselves or hasn’t been prepared by a real estate lawyer. Truthfully, the extent of these closing costs vary from property to property, with some factors only counting toward the properties in which they apply. Some of these fees will also differ based on the province in which you’re buying your home.
Read on to see a break-down of the closing costs that you will likely be expected to pay before your sale is officially closed.
What Will You Need to Pay on Closing Day?
The majority of mandatory fees attached to closing day on any property sale are related to tax and insurance. These fees will include:
● Land transfer tax – The amount of land transfer tax varies between provinces. Some cities also mandate a municipal land transfer tax.
● Legal fees – The preparation of closing documents can cost upward of $500 that will be due to your real estate lawyer.
● Title insurance – Title insurance is typically required of lenders to protect against their potential losses if there is an ownership dispute over the home or if there’s alien or a second mortgage against the property. This insurance can be purchased through your real estate lawyer for anywhere between $100 and $300.
● PST or CMHC insurance – Insurance, particularly PST insurance, is required to be paid for at the time of closing.
● Property insurance – This form of insurance financially protects your home and the items within it from whatever occurrences are outlined by the insurance plan.
● Property taxes – This might need to be reimbursed to the previous owner if they have already paid the full property tax of their property for the entire year.
● Utility bills – There is a strong chance that you will be required to pay the bills for your first month’s of utility coverage.
How a Real Estate Lawyer Will Help
The above only covers what are the standard, typically mandated closing day costs. A real estate lawyer can help you become aware of any additional costs that might be accrued between the day the sale proceedings begin and closing day. Your real estate lawyer will be responsible for the official documents related to the sale of the home to you, their client, and will be privy to the amount that you will have to pay over the course of this process.
A real estate lawyer is an important resource to have when you are buying a home. Throughout the home-buying process, they will protect you financially and advise you regarding the best courses of action that you can take on your path to home ownership.