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Be Prepared for Closing Costs

When you buy a home, you will need to be prepared to pay more than just the purchase price to close the deal. As a rule, be prepared to put aside two percent of the purchase price of the house you are buying to cover the closing costs and expenses.

Some of the closing costs are taxes imposed by the government, while other ones are costs that lending institutions require that purchasers cover before the sale can be completed. Other costs must be paid to ensure a clear title is being transferred to the new owner. Examples of typical closing costs include the following:

  • Survey

The agreement of purchase and sale will include a clause asking the vendor to provide a survey to the purchaser (at their cost) within a certain time limit. If the vendor does not provide the survey, you may have to pay for the cost of having one prepared. This could cost up to $1,000.00.

  • Land Transfer Tax

Land transfer tax must be paid on all real estate purchases. It is calculated based on a set formula depending on the price you paid for your home.

  • Legal Fees and Disbursements

The exact amount you will be charged in legal fees will vary according to the lawyer. Disbursements are charged separately and are the costs that the lawyer pays on your behalf. These costs include registration fees, photocopies, etc.

  • Prepaid Property Tax and Utility Adjustments

You will be responsible for reimbursing the vendor for the cost of any prepaid property taxes or utilities. The lawyer will prepare a statement of adjustments calculating these costs and indicating the balance of funds payable on the date of closing.

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