For many people buying their first home, every step of the way can seem complicated and confusing. When it comes to closing costs, many home buyers enter the process completely unaware that they even exist – let alone what they mean and how they add up. Closing costs can be as much as 1.5 per cent of the total purchase price of your home.
Your Calgary Mortgage Broker is Here to Help
Many closing costs can be financed into a mortgage, but some cannot. Mortgages by Candice is here to shine a light on what closing costs are and how they affect your mortgage. We can guide you through the pre-approval process, so you will be sure to understand all the little details along the way. We also offer personalized services like debt consolidation, refinancing, and home equity loans that can help you achieve your financial goals whether this is your first home or your fifth. By working with a Calgary mortgage broker who knows the local market, you can sail smoothly through the home buying process and avoid the pitfalls of closing costs that catch some new (and even more experienced) home buyers unprepared.
What Are Closing Costs?
Closing costs are fees charged by lenders and other parties relating to the purchase of a home. Depending on the specifics of the contract, the exact closing costs a buyer might have to pay can vary, but they usually include:
- Property transfer fees – Alberta doesn’t tax real estate transfers, but there are still fees that apply to the value of the property and the mortgage.
- Appraisal fees – Appraisals aren’t always required, but they often protect the buyer, so they are usually well worth the relatively small investment.
- Site survey or title insurance – Normally the responsibility of the seller, site surveys can expire, in which case the buyer would be responsible. Title insurance typically costs less but has to be paid each time the property is mortgaged.
- Home inspection costs – This is probably the most important step a home buyer can take to make sure a home is sound and to identify potential future issues. Home inspections are optional, but it’s highly advisable to have one preformed.
- Legal fees – All contracts should be reviewed by an attorney. There are also fees for registering a mortgage, which can be done by a notary or an attorney.
- Homeowners insurance – Lenders require proof of insurance in order to protect their investment from damage.
- Mortgage insurance – This is to protect a lender’s interests if a buyer defaults on mortgage payments. It is required if a buyer’s down payment is less than 20 per cent of the purchase price.
- Property tax – Taxes vary depending on the location of the home, but they are usually based on a percentage of a home’s market value.
- Mortgage lender or broker fees – Some lenders charge fees. Brokers do, too, but the buyer might not be responsible for them. Your Calgary mortgage broker will let you know up front if you will have to pay a fee.
- Additional costs – This includes title searches, title insurance, title transfer fees, recording fees, home warranties, home owners’ association (HOA) fees, and pro-rated interest.
Homebuyers who understand these costs will be better prepared to complete the process and make accurate financial plans for their future.
Get the Guide!
When the time comes, we want to help you be ready! As a Calgary mortgage broker with a great deal of experience in the local market, Mortgages by Candice has prepared a guide clarifying closing costs. Not only does it detail all of the typical costs outlined above, it also provides an estimate of what a homebuyer could expect to pay for each one. The guide includes a list of important tips to help you keep closing simple and a closing cost worksheet, so you can plan your budget well before your closing date arrives.
For first-time homebuyers, the language of real estate can be overwhelming, but don’t let terms like closing costs and pre-approval intimidate you. If you have been thinking about a home in the Calgary area, mortgage rates are near their all-time low, so now is an excellent time to buy. With the guidance of a Calgary mortgage broker, you can become an educated buyer while you are in the process of buying your dream home and planning your financial future. Contact Mortgages by Candice today to get started!