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Tag: closing fees

  • Most Common First Time Closing Mistake

    Most Common First Time Closing Mistake

    We love working with first time home buyers and are always striving to educate clients to ensure their first closing experience is a smooth one.

    Let’s face it. Buying a home isn’t easy.  There’s a lot to know about buying and closing a home and while there’s a flood of information out there, it is important to get the right professionals working with you to make your home buying experience as smooth and stress-free as possible.

    The most common first time closing mistake we see with buyers is forgetting to budget for closings costs. With all the excitement, first time buyers often forget that these closing costs must be paid upfront in cash, unlike the mortgage which is amortized and paid in instalments over time.

    Before the keys can be handed over, however, there are still a few expenses buyers need to shell out for. These closing costs must be paid upfront in cash, unlike the mortgage which is amortized and paid in installments over time.

    Below we've broken down the closing costs you need to know about as a buyer so you don't fall for the most common first time closing mistake:

    Down Payment

    While your lender will provide your mortgage funds to your real estate lawyer on closing day, as a buyer, you must have the cash down payment ready to go, minus any amount that has already been paid as part of your deposit.

    If you aren’t liquid (meaning you don’t have the down payment money sitting in cash), make plans to have the down payment cash ready at least 3-4 days prior to closing.  Keep in mind that if you have your money with an online bank, it may take a few days to transfer funds, so plan accordingly.

    Your lawyer will be in touch a few days prior to closing to let you know the exact amount to bring towards the closing.  This amount will include any adjustments, legal fees, land transfer tax and other costs we’ll discuss shortly.

    For information on how your family may be able to help you cover this cost visit our gifting a down payment blog post.

    Adjustments

    What's an "adjustment"?

    If you are buying a resale or new construction property, you will likely have to pay for several adjustments on closing. Adjustments can include payments for utilities, property taxes or in cases of new construction, account setup fees, development charges, and others.

    Adjustments can range from a few hundred to several thousand dollars.   For example, if the seller of your property has paid property taxes for the year and you are buying the property halfway through the year, you will owe the seller your portion of the property taxes.  

    Your lawyer will inform you of adjustments a few days prior to closing.

    Land Transfer Tax or Property Transfer Tax (LTT / PTT)

    Home purchases in Ontario and British Columbia are subject to a provincial land transfer tax. Outside of the down payment, this is likely the largest outlay to be paid at the time of closing so it is very important to budget for.

    Home buyers in the City of Toronto pay municipal land transfer tax (MLTT) in addition to the Ontario LTT, which effectively doubles the land transfer amounts owed.

    Legal Fees, Disbursements, Title Insurance

    Legal costs include a number of services, such as registering the transfer of the property and registering the mortgage. Your lawyer will also facilitate the purchase of title insurance, which protects the buyer from any other claims made toward the property. It can also include the ordering of the property survey, should the buyer wish to obtain one.

    Legal fees and title insurance premiums can vary depending on the property type, location, and several other factors.

    When you can anticipate and budget properly, the stress associated with closing your first property can be drastically reduced. Remember to consult with professionals such as your Realtor, Mortgage Broker and Real Estate Lawyer, and ask lots of questions... there's no bad or silly questions you can ask.

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  • 7 Questions to Ask a Real Estate Lawyer When Buying

    7 Questions to Ask a Real Estate Lawyer When Buying

    If you just firmed up your purchase or sale (Congrats!), you’ll likely need to choose a Real Estate lawyer to facilitate your closing. No matter which lawyer you choose, asking the right having the questions to ask a real estate lawyer before deciding who is going to handle your transaction can make, or break, the entire experience. 

    Here are some questions to ask a real estate lawyer considering them to represent you when buying or selling a house or condo:

    How Long Have You Been Practicing?

    Before hiring a real estate lawyer, it can be crucial to find out how much experience they have in the industry handling residential real estate transactions.  

    A good question to ask is how many transactions they have closed in the course of their practice.

    Although, it is not always necessary to find a seasoned professional with decades of legal work on their resume, finding a fairly experienced lawyer is extremely valuable.  Like any specialists, Real Estate lawyers who exclusively practice in Real Estate are more likely to have a wealth of knowledge and experience that will help with your transaction in comparison to someone who may be practicing in other legal disciplines. 

    What Do Your Closing Feed Include?

    Upon closing, the last thing you want is to be surprised at additional/unexpected closing costs. In addition to legal fees, there can be additional closing costs such as for title insurance, land transfer tax, disbursements and government fees. 

    While sometimes circumstances may lead to additional charges, make sure you know what your lawyer will charge you for legal fees and what they expect to charge on top of legal fees.  

    Things can get confusing as some lawyers may offer fixed fees which combine legal fees, disbursements and other charges into one overall bill, while some may advertise or quote their legal fees and will add additional fees and disbursements.  It is therefore important to ask and understand what an estimated final bill will look like, after legal fees, disbursements and government charges.

    While buying a home has most people strapped for cash as expenses can rack up quickly, the lowest price lawyer isn’t always the best choice.   What may look initially as saving a few hundred bucks can easily turn into thousands in potential additional costs if parts of the transaction aren’t done right.  Make sure to hire a professional who you feel comfortable with.

    Deeded offers transparent pricing so that you know exactly what is included in your legal fees and what to expect in terms of additional fees or disbursements.

    What Should I expect In Terms of Process?

    Buying or selling a home is a major transaction.  It is important to understand the closing process, especially when your lawyer’s office will be in contact, what information or documents they might need from you, and when you should expect to get updates on the progress of your transaction.

    Since every lawyer works in a slightly different manner, it is important to clarify and understand your role in the process in order to ensure a smooth closing.

    What is My Title Insurance Premium?

    Most purchase, sale and refinancing real estate transactions will include a title insurance policy in order to protect you and your lender from an array of issues that can occur after closing.  

    Title insurance costs vary depending on the price, location and type of property you are purchasing or refinancing and can range from a few hundred dollars to a few thousand,  so knowing what to budget in additional costs can save you from surprises down the road.  

    Our calculator estimates your title insurance premiums, but rates can vary greatly so please check with your lawyer to ensure you are getting the most accurate premiums for your transaction.

    How Much Land Transfer Tax Will I Pay?

    Land transfer tax applies if you’re purchasing a property.  The amount of taxes paid can be significant and vary depending on the price of your property, what municipality it is located in, and whether you’re eligible for rebates such as a first-time buyer rebate.   

    Land transfer taxes can be the most significant part of your closing costs, so it is important to know what to expect up-front.   

    Our land transfer tax calculator can estimate what you’ll be expected to pay, but it is important to verify any details with your lawyer and see if you’re eligible for any rebates.

    Are There Tax Implications For My Transaction?

    While your Real Estate lawyer likely doesn’t provide tax advice, your real estate transaction may trigger tax implications such as HST payable on a new construction home or an investment property, all the way to income taxes or capital gains taxes in certain cases.  There are also situations where you may be eligible for certain tax rebates to offset taxes payable.

    Nobody likes to be slapped with an unexpected tax bill or even worse, a re-assessment, so understanding what your transaction may trigger may be a question you’d want to ask your real estate lawyer or accountant.

    When and Where Will The Signing Take Place?

    Signing typically refers to having a meeting with your lawyer to sign the requirement documents for your Real Estate transaction.  Signing typically takes place a few days prior to closing and may involve all registered owners (whether you’re buying or selling), attending the signing appointment.

    Because life gets busy with work, travel and the occasional vacation, it is important to know when and where you're signing will take place.  If you won’t be in town or have other commitments that prevent you and other registered owners from attending a signing appointment (usually during business hours), your closing may be delayed.

    Deeded offers at-home signing appointments as part of our service.  This means we come to your home at a convenient time (including evenings and weekends) so you don’t have to take time off work or travel to a lawyer’s office to attend your signing appointment.

    In summary, choosing your Real Estate lawyer with care and asking the right questions up-front can prepare you for a smoother home closing, reducing surprises, and get you into your home faster.

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