Last evening, I attended a Mortgage and Home Buying Seminar put on by Ritchie Simpson and Perri Craig of Centum Financial. My own mortgage is up for renewal, and I also wanted to hear about what is going on with rates at the moment for my clients. Rates are really fantastic right now, so it is a great time to buy in Charlottetown. I think these types of seminars will be happening again so if you are interested in attending one, just let me know and I can advise the dates of the next one.
One item that caught my eye was the breakdown of closing costs. I will not soon forget my husband and I sitting in our lawyers office to close on our second home purchase. We were signing tons of papers and at the end our lawyer says "great, now you just need to pay me $3000 to close". We were speechless, and did not have $3000 as we put a big down payment on the house without taking into consideration the closing costs. Thankfully, the lawyer we had was my brother-in-law Jeff. He covered for us until we could get a check from Charlotte.
Below is a handout from the presentation last night:
What Are Closing Costs?
Closing Costs are a miscellaneous collection of fees and charges that a buyer of property must pay upon closing of the transaction at the lawyer's office. Depending on the type of property and the nature of your deal these may include but are not limited to the items described below:
- Legal Fees - the fee for the lawyer's time
- Registry Fees - the cost of registering your mortgage and deed at the Registry Office, a division of the provincial government
- Appraisal Fees - the cost of an appraisal if required by your mortgage lender.
- Survey Fees - the cost of a property survey if required by your mortgage lender
- Interest Adjustment - interest charged by your mortgage lender from the time the deal closes to the date of the first mortgage payment period.
- Fuel Equalization - the cost of furnace fuel left behind by the seller.
- Fire Insurance - it will be a condition of your new mortgage that you prove you have Fire Insurance coverage.
- Property Taxes - for the balance of this year and, as well, the lender may require that you top up your property tax fund so that there are sufficient funds available to service the property taxes due for the next taxation year.
- Land Transfer Tax - this is a 1% tax levied on the sale amount of your new home if and only if you have lived in PEI less than 6 months or it is your second home. The tax is collected by your lawyer and he or she can explain the details to you.
How Much Will My Closing Costs Be?
Lenders will want you to provethat you have Closing Costs equal to 1.5% of the cost of your new property by showing the appropriate funds are in your bank account; however actual Closing Costs vary greatly from transaction to transaction and you should be prepared for costs of between $3,000 and $5,000; your Centum representative will help you estimate these costs.
When Do I have to pay Closing Costs?
Unless you have a very good relationship with your lawyer most of these costs must be paid on or before the day you close your deal, which is why they are called Closing Costs.
Visit Centum's website for more great mortgage information.