The 101 on Closing Costs

Dated: September 12 2022

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 When purchasing a home, there are several fees you have to understand and factor in to your budget before you hit the closing table. Here's what you need to know.

 What are closing costs?

Closing costs are the fees for sevices required to finalize your mortgage. Typically, the buyer is responsible for paying these costs unless otherwise negotiated to have the seller contribute. Fees include (but certainly are not limited to) attorney, appraisal, inspection, government taxes, title insurance, home insurance, mortgage insurance and property taxes.

How much are closing costs?         

Closing costs usually total between 3% and 4% of the home's purchase price, and they generally vary depending on the property purchased and the area you reside in. Your lender will provide you with an estimate of your closing costs following your loan approval, and although that number could change slightly, your final costs should be similar.

How can you reduce closing costs?

Some of the fees that fall under your closing costs can be reduced by doing ample research on lenders at the beginning of the homebuying process. Click here to get intouch with our amazing lenders. Then, compare any potential discounts or deals they offer before making your choice. Additionally, you can attempt to negotiate with the seller to cover part or all of your closing costs. 

Can you avoid upfront closing costs?

If you think you will be unable to afford the closing costs upfront, you can opt to roll them into your loan. However, choosing this route often costs more in the long run. At a minimum, you'll have to pay interest on your closing cost, or depending on your lender, you may face a higher interest rate on your entire loan.

Click here to read an informative article on closing costs from our BMO lender, Jill Collings. 

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Darryl Mitchell

Darryl is a recognized professional across Canada representing special properties and clients as they transition to a new home, resort property or business. At one point Darryl was Broker of Record in....

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