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Closing Costs - What you can Expect:
It is important to know and understand all the costs involved in buying a home in a Brockville. Preferably you should know these costs before you even start looking a homes for sale in Brockville. Knowing in advance of your closing date what these additional cost will be over and above your down payment will help you budget for the closing of your new home.
A strong recommendation is a budget of a minimum of 1.5% of the purchase price of your home, which should cover the entire closing costs of a normal home purchase. This amount will help you plan for a smooth closing and avoid any panic issues that arise from not being prepared for the additional expense involved when you close the purchase of your home.
Below is a comprehensive list of closings costs that you might incur, but remember that they are estimates only and should be used as a guideline as of course they may vary depending on your own specific purchase.
Legal Fee and Disbursements
A lawyer will charge a fee for their professional services involved in drafting the title deed, preparing the mortgage, and conducting the various searches. The disbursements, on the other hand, are out-of-pocket expenses incurred, such as registrations, searches, supplies, etc., plus H.S.T. The actual fee that the lawyer will charge will depend entirely upon the deal between you and your lawyer. Be sure to ascertain exactly what this will amount to in a worst-case situation. A typical purchase transaction for a $200,000 property with one mortgage will range between $800 to $1,200 including disbursements. We recommend you call one or two lawyers and obtain a quote directly from them including both their fee and estimates of disbursements before choosing which one you’d like to use.
Land Transfer Tax
There is usually a land transfer tax that is charged on closing when the property is transferred to your name and it can vary depending on the price of the home, whether or not you are a first time home buyer and which city you live in Ontario.
Property Tax and Prepaid Utilities Adjustments
At the time of a sale, the lawyer for the buyer must confirm that the City of Brockville taxes have been paid up to date. If they are, a Tax Certificate is issued, from which any adjustments can be made - usually requiring the buyer to compensate the seller for any prepaid taxes. If they are not up to date, the municipality requires that the seller pay them off from the proceeds of the sale. Therefore, remember that if the previous owner has prepaid property taxes or other utilities for the year, they will be credited the prepaid portion on closing. If they paid all their taxes by April, expect a large adjustment cost on closing! Again, your lawyer will confirm all this for you.
If you arrange to make your mortgage payments monthly on the first day of the month, and your transaction closes after the first day of the month, your lender may charge you interest on closing up to the first theoretical payment date, called the Interest Adjustment Date. Your bank will calculate this for you. Remember, that all mortgages are paid in arrears so if your possession date is June 1st, and you choose to pay monthly, then your first payment will be July 1st. In this example there is no Interest Adjustment payable. However, if you moved in on May 29th, with your first payment on the first of the month, your first payment would still be July 1st, but there will be a three day Interest Adjustment (from May 29th to to the “official start date” of June 1st).
The above are the majority expenses incurred in normal real estate closing, however it is important to know that some housing transactions do run into problems and legal fees can escalate to being much higher than those expressed in this article. The Brockville Realtor you deal with should supply you with these costs or a very close estimate for you. Remember try and set aside approximately 1.5% of your purchase price for your closing expenses.