Home Buyer's Closing
Costs
When buying a new home, there are expenses outside of
your mortgage that you will need to include in your budget.
to help you, we have created this closing cost checklist that
you can use to keep track of your expenses.
Closing
Costs
Definition:
Miscellaneous costs associated with closing a real estate
transaction. Items such as points, attorney/notary fees,
appraisals, credit reports, prepaid interest, homeowner’s
insurance, title insurance, and reserves the lender collects for
future taxes and insurance. The down payment is not considered a
closing cost.
Taxes & Fees
Property Purchase Tax: The
British Columbia Provincial Government imposes a property
purchase tax, which must be paid before any property can be
legally transferred to a new owner. The tax is 1% on the first
$200,000 of the property value and 2% on any value over
$200,000. Ask us about the special regulations for first time
buyers in B.C.
Goods & Services Tax: If you
purchase a newly constructed home, you may be subject to a 6%
GST on the purchase price.(As of July 1, 2006) However, if the
home is under $350,000, and this is your principal residence, a
rebate will reduce the GST paid to 3.84%(effective July 1,
2006) of the purchase price. If the price is over $350,000 the
net GST to be paid increases gradually until it is a full 6% at
amounts over $450,000.
Property Tax: If the current
owners have already paid the full year’s property taxes to the
municipality, you will have to reimburse them for your share of
the year’s taxes. Property taxes are calculated from Jan – Dec
and are paid at the end of June.
Appraisal Fee: When the
lending institution requires an appraisal of the property before
approving your loan, it may be your responsibility to pay the
appraiser’s fee.
Survey Fee: The lending
institution may also require that a survey certificate be
presented to them. The purpose of the survey is to formally
establish the boundaries of the property and to ensure that all
buildings are within those boundaries. If the current owner
cannot provide a recent survey certificate, it will be your
responsibility to pay the
Surveyor’s fee.
Mortgage Application Fee:
Lending institutions may charge a mortgage application fee.
This application fee may vary between lending institutions.
Mortgage Default Insurance:
This type of insurance is required on all mortgage loans in
excess of 75% of the appraised property value. Its purpose is
to insure that the lender will not lose any money if you cannot
make your mortgage payments and the value of your property is
not sufficient to repay your mortgage debt. The insurance
premium is paid to the lender and ranges from ½% to 3.75% of the
loan value; however, in most cases this premium is added to the
loan amount, and paid for over the term of the loan.
Life & Disability Mortgage
Insurance: At your option, you may purchase insurance
that will ensure that your outstanding mortgage balance is paid
if you die or become disabled.
Fire & Liability Insurance:
The mortgage lender will insist that you purchase an insurance
policy which guarantees that, in the event of fire, the lender
will receive the balance owing on the mortgage loan before you
receive any insurance proceeds.
Legal Fees
The transfer of property ownership from the seller to the buyer
must be recorded in the Land Title Office in order to protect
the new owner’s interests. You will probably want to engage a
lawyer or notary public to act on your behalf during the
completion of your purchase. The legal fees for this service
will include payment of a registration fee. If you are
financing your purchase with a new mortgage loan, there will be
a further fee to prepare and register the mortgage documents.
Moving expenses:
Costs will vary, depending on whether you do it yourself, rent a
truck, or hire professional movers.
Additional expenses: These could include utility
hook-up charges, any repairs you need to make after buying your
home, the cost of appliances and window and floor coverings
Home
Inspection Fee
Recommended
before finalizing offer to purchase because it may reveal areas
where repairs are required. Between $150 and $500
Prices/costs
may vary by region and service provider.
For more
information contact your local Realtor.
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list
