House Budget: Closing Costs

Once you have your house picked out and you decide to take the big plunge you should be well aware of a little thing called “closing costs.”

This seemed to be kind of a mysterious thing for me. I didn’t exactly know what to expect… like $2500 I thought… boy was I wrong!

When you buy a home (first time or not), there are various fees in addition to your mortgage that you have to pay for. And unexpected bill or cost is the very last thing you want when you go to pick up your keys.

Closing costs will be different depending on individual circumstances, but here’s a brief summary:

  • Down Payment – Depends on what you choose. The lowest amount you can put down is 5%, but as of April 19th, 2010 the smallest amount you can put down is 10% (in Canada).
  • Title Insurance – Assures title to the property. Costs usually range from $200 to $400.
  • Legal Fees – Vary depending on the complexity of your situation but could cost up to $1,000.
  • Mortgage Insurance & Appraisal – Prepare yourself by speaking with your lender so you’re aware of all the upfront costs associated with your mortgage.
  • Taxes/Fees – Depending on your situation, there could be various transfer fees and taxes to pay that could range from hundreds to thousands of dollars.
And just for the sake of sharing and being helpful, here is what I spent on my closing costs:
  • Down Payment = $7,450
  • Title Insurance = $230
  • Legal Fees = $1,100
  • Mortgage Insurance (CMHC) = $3,893 (rolled into mortgage)
  • Taxes (Land Transfer Tax) = $1240

There are also some expenses that you’ll want to keep in mind after you receive your keys (often referred to as post closing costs) which could include:

  • Moving Costs – Factor in the costs of a moving and/or packing company. If you decide to move yourself, don’t forget the cost of the rental truck.
  • Connection Fees – You may have to pay for hook ups at your new place which could include electricity, gas, cable TV, telephone, Internet, etc.
  • Renovations and Repairs – It’s a good idea to set some money aside for potential repairs that may arise.
  • Miscellaneous – Costs could include such things as having the locks changed, decorating, window coverings, appliances, etc.
And again, for the sake of sharing, a rough estimate of my post closing costs:
  • Moving Costs = about $70 for the truck rental, and $40 for dinner for everyone who helped me move.
  • Connection Fees = $150 First Time Hook-Up Fee for Hydro. Since I already had a Rogers account there were no fees, but I did tip the guy $20.
  • Renovations and Repairs = to date I have spent about $1850 on renos and repairs.
  • Miscellaneous = I spent $2800 on new appliances (as the house came with ones that were completely unusable), and probably another $500 or so on decor.
Please keep in mind, this summary is by no means a complete list, closing costs vary from situation to situation but you can expect that they represent somewhere between 2 – 4% of the purchase price.

Once again I hope that you find this helpful, and feel free to share and tweet away!
If you link, let me know!

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