Calculating Closing Costs

There are many costs incurred with obtaining a mortgage aside from the mortgage itself. If you are looking at investing in real estate it is important to recognize the closing costs in order to be financially prepared. Additional expenses can include legal fees, land transfer fees, property taxes, mortgage life insurance premiums, other insurance premiums, appraisal fees, utility connection costs, inspection costs, and strata fees if you are purchasing a condominium.
A lawyer or notary is an essential part of buying a home. Legal fees range according to the provider and include costs for searching for the property title, arranging surveys if necessary, and other paperwork that needs to be handled. The next cost to keep in mind is taxes. Property transfer tax is charged at a rate of one cent on the first $200,000 of the fair market value of the property and two percent on the balance. Be aware that first time home buyers may be exempt from these costs. Another cost to calculate into your budget is premiums for mortgage life insurance. High ratio mortgages will always require mortgage insurance and the costs will vary depending on the amount of the mortgage. Other insurance premiums include insurance on the property that you are buying. If you are buying a house expect the premiums to be significantly higher than insurance on a condo. Though condo insurance may be lower you will also be required to pay a monthly strata fee. Depending on when you move in you may owe a portion of this monthly cost immediately. Though it is optional, another closing expense to consider is an inspection. For home buyers the inspection will cost more and be more extensive than for a condominium. Inspections range in cost depending on who is providing the service and what is being inspected. Lastly it is important to consider the costs of moving such as moving trucks, hired movers, utility hook up fees, and cleaning supplies and services.
Because mortgage rates are quite low at the moment, buying your own property may seem like an extremely attractive option. Make sure to speak with your realtor as they will be able to educate you on the realities of closing costs.