About Closing Costs When Buying A Home

Closing costs are a necessary part of home buying, and like the down payment, must be proven to the lender, as readily available in order to receive mortgage pre-approval.

As closing costs are directly correlated with the purchase price of a home, lenders require that the home buyer has 1.5 to 2% of the purchase price set aside for closing costs. It is important to note that this amount will be in addition to the down payment. The following is an example of what you might expect for closing costs when buying a home:

In addition, there will also be:

• Property Tax Adjustment: Your lawyer will calculate the amount of property tax the seller paid that goes beyond the seller’s time in the home. This can amount to a few days, weeks, or months.

• Fire Insurance: This must be in place for mortgage funds to be released.

• Property Appraisal: if the lender makes a request, this can cost approximately $400.

• Professional Home Inspection: prior to completion of the sale, $350-$450.

• Title Insurance: Safeguards against fraud and problems with the property title or survey. $150-350.

• Interest Adjustment: In Saskatchewan, the requirements for taking possession of a property are that you need to have mortgage commitment papers signed, and the cash portion (down payment) paid. In the meantime, the title transfer will be in process. Depending of the time of year, it can take 3 to 10 days for land title to complete. Once the title is registered, the lender will allow the mortgage funds to be released. Interest adjustment will have to be paid to the seller for the time during which possession of the property has changed over to the buyer but the mortgage funds have not yet been released.