Understanding Closing Costs

Before you take possession of your new home, you need to consider all the additional costs of obtaining your home.  
Closing Costs are generally estimated around 1 - 1.5% of the price of the home, these unavoidable costs are the last hurdle between you and home ownership. 
Costs can vary depending upon your down payment amount and the specific location of the property.  

MORTGAGE DEFAULT INSURANCE
This is a necessary expense for buyers who make a down payment of less than 20%. The cost of this insurance depends on the amount of your down payment and also specific details of your application. The premium ranges from between 0.5% all the way up to 6%. This premium is charged on the amount of the mortgage and can be added on to the mortgage balance.

HOME INSPECTION
Real Estate agents frequently counsel buyers to make an offer on a home conditional on the outcome of an independent home inspection. A home inspector looks for items that could affect the price and desirability of a home.The fee depends on the home’s size, age and the amount of time it takes to do a thorough inspection. Approximate cost $300-$500.

APPRAISAL 
An appraisal may be required to determine the market value of the property you are buying. In most cases, it is paid by you and can cost from $275 and higher, depending on the appraisal company, the size of the property and its location.

HOUSE INSURANCE 
Canadian law states that a homeowner must have fire insurance on his or her new property effective when he or she takes possession.  You need to protect your home against fire and weather related damage. The insurance policy must be in effect so you can close on your new mortgage. Some lenders may require confirmation of the policy 3-5 days before closing. Don't leave to the last minute, as it may cause a delay in mortgage funding.

PREPAID BILLS
The seller may be entitled to reimbursement, from you, if they have prepaid bills (property taxes, water, oil/gas or hydro). Your lawyer will be able to calculate this amount.

TITLE INSURANCE
This protects you from any unpleasant revelations about your property’s history that might crop up in the future. This insurance is obtained through your lawyer or notary and is approximately $200 - $300.

MOVING EXPENSES
Whether you’re hiring professional movers or consider asking for help from friends and family, you can expect an outlay of cash on moving day. 

SERVICE ACTIVATION FEES 
Once you move into your new dwelling, you’ll inevitably have to pay activation fees for utilities such as phone, cable, oil/gas and electricity.

MORTGAGE LIFE INSURANCE
TMG offers life insurance on your new mortgage. TMG Assure can help protect your ability to meet your financial obligations by providing a benefit in the event of your death, disability, or critical illness. 

FORWARDING YOUR MAIL
You’ve made a point of notifying the important people in your life -- family, friends, employers, the bank, the utilities, your credit card company -- of your new address. However, you’re bound to forget someone. For a fee, Canada Post will forward mail sent to your old address to your new residence.

*EXISTING MORTGAGE PENALTY (applicable if discharging an existing mortgage only)
When a closed mortgage is paid out before the maturity date a penalty is assessed by the current lender. The penalty may be 3 months interest or the loss of IRD (Interest Differential) on your mortgage to its maturity date. The penalty estimate is subject to change as interest rates fluctuate. 
The penalty is not finalized until there is a formal payout statement requested, based on a firm payout date.

Call or email me directly, if you have any questions - I like talking mortgages and real estate.
If you know anyone who could use my services, and would like to talk, a referral is appreciated. 

Glen Estabrooks
C: 902.489.4898
O: 902.835.3407
E: glenestabrooks@mortgagegroup.com