Closing Costs
Finalizing or "Closing" a real estate transaction can
involve costs that may come as a surprise if you don't know what to
expect. There are a variety of fees, taxes and other expenses
that require payment before you take possession of your property.
If you are getting a high-ratio mortgage, the cost of
'mortgage insurance' can be paid
immediately. On the other hand, you might have the option of
adding the insurance fee to the loan, but then it will cost more because
you will pay interest on it over the life of the mortgage.
You will probably pay a fee to your lender to have an 'appraisal'
done because most lenders will require an appraisal be done on a
property before approving a mortgage. You will likely have to
arrange for pre-paid 'home insurance'
too, since you usually can't get a mortgage without a home-owners'
insurance policy to protect your home and the lender's investment.
There will be some delay while mortgage documents are being
registered in the government 'Land Titles
Office'. When that happens you may not get your loan
until after the possession date and you may have to pay interest to the
Seller on money owed to them at the same rate as your mortgage until
they receive the full sale price.
Taxes - No matter where you live,
you can't escape 'property taxes'
The tax year is the same as the calendar year, but property tax in
British Columbia is generally paid in one amount towards the middle of
the year. Depending on when you take possession, you may have to
reimburse the Seller for part of the year if they have already paid the
Property Tax Assessment, or you may find the Seller owing you money if
you have to pay after you move in. Either a credit or a debit for
taxes will be included in the Statement Of Adjustments prepared by your
legal professional at the time of the sale.
You also have to pay a 'Property Transfer
Tax' in British Columbia. This tax is one-percent on
the first $200,000 of the purchase price and two-percent on the
remainder. The only exception is for those individuals who
purchase a home with a purchase price of less than $400,000 and
who have never owned property before - anywhere. These individuals
are eligible for the First Time Homebuyers Grant/Exemption.
Additional Services and Costs - A
real estate agent's fee is usually paid by the Seller, but other
professional services aren't. Almost all home buyers need a
legal professional to provide title search, title & mortgage
registration, zoning memorandum, a tax certificate amongst other things.
You may also need the services of a surveyor, an engineer, a home
inspector or an appraiser.
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