Buying a home is an exciting milestone! To ensure a smooth process, it’s crucial to have a comprehensive budget that includes all potential expenses, not just the purchase price of the home. One key area to consider is closing costs, which can significantly impact your financial planning. Understanding these costs will help you stay within your budget and maintain financial stability.

Closing costs are one-time fees that come with the purchase of a home, separate from the mortgage insurance and down payment. These costs typically range from 1.5-4% of the purchase price, depending on your location. For example, for an $800,000 home, you should budget around $22,000 on average for closing costs.

Here are some common closing costs to consider:

**Land Transfer Tax:** Calculated as a percentage of the purchase price, this tax varies by province and, in some cases, by city. For example, Toronto has a municipal land transfer tax in addition to the provincial tax.

**Legal Fees and Disbursements:** Expect to pay at least $500 (plus GST/HST) for legal fees associated with the preparation and recording of official documents for your purchase.

**Title Insurance:** Required by most lenders to protect against losses from property ownership disputes, title insurance is typically purchased through your lawyer or notary and costs around $300 or more.

**PST on CMHC Insurance:** Although CMHC insurance is included in your mortgage, the PST on this insurance must be paid separately, usually through your lawyer and sometimes deducted from your advance.

**Home Inspection Fee:** A home inspection is highly recommended to avoid future surprises. This can cost around $500.

**Appraisal Fee:** An appraisal, which confirms the home’s resale value for the lender, typically costs between $400 and $600 and is often covered by the lender.

**Property Insurance:** Property insurance, which covers the replacement cost of your home and its contents, must be in place on closing day and is paid in monthly or annual premiums.

**Prepaid Utility Bills:** You may need to reimburse the previous owner for prepaid property taxes, utilities, and other costs.

**Property Taxes:** Calculated as a percentage of your home’s value and varying by municipality, property taxes are due annually. You might also need to reimburse the previous owner if they have already paid for the year.

Knowledge is power. Understanding these hidden costs will help you create a realistic budget and ensure you stay within your financial means. If you have any questions about your home purchase or need assistance, contact me at (289)455-8801. We’re here to help you navigate the process, whether you’re buying now or planning for the future!