What Exactly are “Closing Costs”?
April 14, 2009 9:44 am First Time Home Buyer, ListThey are:
- Legal Fees,
- Land Titles Disbursements,
- Property Tax Adjustments,
- Real Property Reports,
- Fire Insurance, and
- Interest Adjustment Date.
LEGAL FEES
Your realtor or mortgage broker will refer you to a lawyer that they trust and who is familiar with real estate law. Legal fees will vary from lawyer to lawyer. Typically they range from $800 to $1,200.
LAND TITLES DISBURSEMENTS
Land titles disbursements remain constant.
Below is an example of these disbursements.
- Mortgage registration – $1 per $5,000 plus $15. This charge is based upon the amount of the mortgage. For example a purchase of $150,000 with a mortgage of $100,000 the fee would be $35.
- Title Transfer – $1 per $5000 plus $35 & $9. This charge is based upon the purchase price. For example a purchase of $150,000 the fee would be $74.
- Tax Certificate from the city of Calgary – $12.75
- Land Titles search and City of Calgary Search – $15 – $30
- Couriers – range from $30 – $60
- Photocopying, postage and faxing – $30
Add your lawyer’s legal fees to the disbursements to determine your entire legal bill.
REAL PROPERTY REPORT
A Real Property Report is a legal document that clearly illustrates the location of significant visible improvements relative to property boundaries.
Your mortgage lender will always require a Real Property Report. The offer to purchase contract used by the Calgary Real Estate board, states in clause 2.22 that the seller has to make the RPR available to the Buyer along with a stamp of compliance from the City of Calgary. If one is not available, make sure that you contact your realtor and lawyer immediately. Some mortgage companies are accepting Title Insurance in lieu of an RPR. Call your lawyer to make sure that your mortgage company accepts Title Insurance. If Title Insurance is used there will be a charge to you. You can expect a cost of around $400.
FIRE INSURANCE
The lender requires that you keep your house adequately insured and that the lender is made “First Loss Payable”. A good place to purchase your fire insurance is through the broker that handles your car insurance. To get this proof contact your insurance provider/broker and they will arrange to have your file updated and this information forwarded to you. This proof of fire insurance is to be provided at the lawyer’s office.
PROPERTY TAX ADJUSTMENTS
When you purchase a property you will now have to pay property taxes to the City of Calgary. Property taxes are due in full the last week in June each year. The City has implemented a program called the Tax Instalment Payment Plan (TIPP) which deducts 1/12 of the annual tax bill from your bank account each month. Most lenders now prefer that you pay using this method. There may be a tax adjustment (payment from you or to you depending on the previous owners method of tax payment) for the current year. Your Lawyer will notify you of any “adjustments”.
Please call me to find out more about Closing Costs.
