How home closing costs can add up
Home buyers are often advised to set aside one-to-three per cent of the purchase price of their house for closing costs. These fees are explained during the home buying process, but it is helpful to ask questions so you fully understand how these costs can affect your budget.
Planning ahead is essential in the home buying process, especially when it comes to budgeting. Here, the Toronto Star helps to make the closing process and its associated costs a little clearer.
One of most substantial portions of the closing costs will be the legal fees. It is always helpful to contact more than one law firm for a quote or asking your mortgage broker which law firm they recommend. Some law firms specialize in mortgages and will offer a discounted rate as a result.
Other costs to keep in mind are the property tax adjustment and the interest adjustment. If you are purchasing an existing property, you are required to reimburse the previous owners for the property taxes they have prepaid for that year. The interest adjustment is an interest only payment calculated from the closing date until the interest adjustment date.