Mortgage Closing Costs – What to Expect

If you are in the market to buy a new home, you are already aware that it is a pricey proposition. A house is the most expensive purchase most of us will ever make; in fact even among the filthy rich, a house will be the single most valuable possession.

You might be among the first time home buyers who think that once you settle on a price for the house, the costs have all been enumerated. Unfortunately, this is not so. There are several fees that you must pay before you actually take ownership, known as closing costs. They can add up quickly so it is best to be prepared; in this article we will outline them for you. (Note closing costs are different from place to place, and this article deals with those associated with Canadian real estate).

Two categories of closing costs

There are two categories of closing costs, recurring and non-recurring. The terms are fairly straightforward, although mortgage companies may not be insofar as disclosing them all.

Recurring costs

Insurance. You have to renew your home owner insurance every year by the terms of all mortgages.

Property taxes. Once you’re in the market, the city cheers with delight, because you get to fork over a good portion of cash each year for the privileges that city provides.

Notary fees

Home inspection

Non-recurring costs

Here is where the lending company will really ding you, but you don’t have much choice. The list of non-recurring costs is actually quite huge, but not all mortgage lenders will charge you all of them.

Document preparation fees. Lots of paper work, and someone has to fill it all out, and the company will make sure that cost is passed on to you.

Underwriting fee

Credit report. Probably the lowest of the closing costs.

Appraisal fee. In case of default lenders want to know how much the property is worth, and again they will pass this fee on to the borrower.

Mortgage broker fee.

Tax service fee

It’s quite the list, but believe it or not it is not all complete. There are a couple of bright points, however. The first is that most of the time, all the fees are lumped together and you just have them as part of the loan without having to think of them (those that prefer to watch their money closely still have the opportunity to shop around). The second, from the perspective of the buyer, is that most of the time these costs are covered by the seller as part of the contract. Of course, the seller will often cover the expenses by charging slightly more for the home.…