I am Ready to Buy a House: What Home-Buyer Closing Costs Can I Expect?

Everything you need to know

Your property is the most important purchase that you will make in your life. However, the purchase does not end with the cost of the property itself. Closing costs – including the items listed below – can really add up. You must factor these costs in to your budget to avoid any last-minute surprises.

DOWN PAYMENT

The down-payment is the cost you already knew about before, and it is by far the biggest cost associated with buying your property. The down-payment can range from as little as 5% to as much as 25% of the total cost of the property.

But here’s what you probably didn’t know. If your down payment is under 20%, you will have to arrange for mortgage default insurance. Though costly, this insurance protects you in the unfortunate event that you default on your mortgage. But, putting a 20% (or higher) down payment avoids you from having to obtain mortgage default insurance.

MORTGAGE PROCESSING FEE

The mortgage processing fee usually covers the independent lender appraisal fees. The independent appraisal is completed by a third party, arranged for by your bank, to determine the value of the property and whether it meets lending criteria. The mortgage processing fee may also consist of application fees and fees for lender’s insurance if required. You can expect this fee to be roughly $350.

HOME INSPECTION

Home inspections are typically completed by a third-party and consist of a thorough examination of the physical structure and systems of a property. This includes an assessment of the foundation, roof HVAC systems, electrical system, plumbing system, walls, ceilings and floors, among other features of the property. Usually, the home inspection is completed before closing. However, this is a just-in-case fee that you should budget for, and is typically around $500.

LEGAL FEES

This umbrella will cover all the legal items needed to complete your transaction, including: title searches, registration of the mortgage, obtaining title insurance, and deed registration. Expect to also be billed for office expenses like photocopies, postage, faxes, and courier charges. The following is a breakdown of how these items might be priced.

          • Lawyer Legal Fee: $800.00 – $1,000.00
          • Title Search: $150.00 – $180.00
          • Registration of Deed: $71.30
          • Registration of Mortgage: $71.30
          • Execution Certificates: $33.00 – $55.00
          • Title Insurance: $250.00 – $350.00
          • Office Expenses: $40.00 – $50.00
          • Land Transfer Tax: Fees based on purchase price

HOME-BUYER CLOSING COSTS BUDGET:

As a general rule, expect to budget 1.5% of the purchase price to cover all associated closing costs, on top of your down-payment.

Whether you are looking to buy or sell property in the Greater Ottawa Area, it is critical that you have a real estate agent on your side who understands your needs. Adam Mills and his team have been in business for over ten years and have a proven track record for success. Our team is comprised of knowledgeable and experienced professionals who are happy to help you navigate the ever-changing Ottawa real estate market. Please contact us at 613-825-7653 or email us at info@ottawaishome.com for more information or help with your relocation.