What are real estate closing costs?
When buying a home, you may hear the term “closing costs” thrown around. Closing costs is an all-encompassing phrase that includes any extra costs involved in the home buying process that are not included in the home’s price and are due on closing day.
Normally, closing costs can range from one per cent to three per cent of a home’s purchase price, depending on what closing costs are involved. If you are concerned about the amount of closing costs you will be paying, your lender can give you the best idea of what to expect.
Examples of real estate closing costs
Appraisal fees: many lenders require an appraisal of a property before they will put up the financing for it.
Home inspection fee: getting a home inspection is an extremely important part of the home buying process, and can protect buyers against serious problems down the road.
Property taxes: The lender may require the payment of the leftover property taxes for the year as well as guaranteed funds ready for next year.
Land transfer tax: The city of Toronto has a land transfer tax, which can be up to two per cent of your home’s price.
Legal fees: Your real estate lawyer will charge you fees for their time and services.
Saving on closing costs
It is possible to save on closing costs by making your offer on a home conditional on having the seller cover the closing costs for you. Some sellers may reject this idea, but it never hurts to ask. Talk to your real estate buyer’s agent to learn more.
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