Step1: Pre-consideration | Step2: Finance/Qualification | Step3: Purchase/Closing
Step3: Purchase/Closing
- How to Buy a Home : The basic steps
- How to make an Offer to Purchase : Step by step
- What about a Survey? : You probably will need one
- Should I get a Home Inspection?: Yes
- Real Estate Condition Report : Seller should fully disclose
- Things to know about Legal costs
- Some Closing Tips : Be ready
7. Some Closing Tips : Be ready
> The Closing Day
It's a day filled with nervous anticipation. This is the day on which all of the legal and financial promises in the offer are met. It's the day when you get the keys and begin a new phase in your life. Your RE/MAX agent and your lawyer will give you all of the details on steps and timings. All of the small details will be taken care of ahead of time, so in most cases it will be just a day of waiting by the phone.
Also, remember that this is a hectic day for the seller, too! Very often it's moving day and they're trying to gather all of their belongings to leave as the purchaser is trying to move in.
In brief, here's what takes place before the actual closing day:
- A copy of the offer will have been forwarded to the office of your lawyer. Your lawyer will have reviewed the conditions of the sale. You will have made your lawyer aware of how you, and any co-buyers, will be registered on the title of the property.
- All of the conditions in the offer to purchase must be satisfied by the closing date. If one of the conditions in your offer was a house inspection, it should have been completed by the closing date, and you should be satisfied with the report.
- All of your financing details will have been finalized and ready to fall into place on the closing date.
- If the vendor did not have an up-to-date land survey, you'll have have one done. Your lender will insist on it or look into obtaining Title insurance.
- Your lawyer will search the title of the property to ensure that you can purchase the home without any legal problems. Your lawyer will also make sure that tax payments have all been made and there are no liens on the home or the personal property the vendor has agreed to sell you as part of the deal.
- You'll want to make sure that you've contacted all of the utility, cable, and phone companies to ensure an easy transition of service and billing.
- Your lawyer will prepare a statement of adjustment. This confirms the selling price, adjustments, and the balance (less the deposit you provided with the offer). Your lending institution will draw up a certified cheque for your lawyer to hold in trust.
- Additional settlement charges will have to be paid:
Your lawyer's fee and disbursements
Condo and co-op fees (Remember to ensure there is an adequate Reserve fund in place and that the condominium has a proper Technical Audit and Reserve Fund Study completed by competent professionals.)
Tax and utility adjustments; if they have been pre-paid, you'll have to pay the vendor for the portion of the service you assume
Land transfer tax; based on the price of the home, this fee ranges from 0.5% to 2% of the selling price
- You'll want to make sure your homeowner's insurance policy will be in place to cover your new home and property once the deal is closed. Your lawyer will need a copy of the policy before closing.
> Additional Costs
Before you calculate the amount of your down payment and determine what you can afford, it's a good idea to set aside a few thousand dollars to cover the extra costs that seem to spring out of nowhere. Here is an overview of costs you could encounter. The good news is that not all of them will apply.
- Property Taxes
If the Vendor has paid a portion of the taxes in advance, you will be responsible for reimbursing the Vendor on closing. Plus, if you have a high-ratio mortgage, your lender may require that you have your property taxes added to your mortgage payments.
- Utility Fees
Utility fees are calculated through a meter so you will be responsible for paying what you have used up on the meter.
- Land Transfer Tax
This applies in most provinces and ranges from 1% to 4%. For instance, in Ontario, you'll pay 1% of the first $55,000 - $250,000 and up to 2% of any amount over $400,000.
- Survey Fee
Your lender will require an up-to-date survey. You can make it a condition of the Offer to Purchase that the Vendor provide a survey, or you will have to have one done. If there is no survey available, you may purchase "Title Insurance" in lieu of a survey which saves you about $500 - 700.
- Appraisal Fee
A basic appraisal usually costs under $250.
- Property Insurance
Your lender will insist that you have insurance on your property because your home is used as security for the mortgage.
- Service Charges
You'll be charged for telephone, cable and a variety of other services that you hook up at your new home.
- Lawyer (Notary) Fees
Each real estate transaction requires the assistance of a legal professional to review the Offer to Purchase, search the title, draw up the mortgage documents and take care of the details on the day of closing. Lawyers fees range widely depending on the complexity of the transaction. Ask your RE/MAX agent to recommend a lawyer. And remember, fees can be negotiated.
- Mortgage Loan Insurance Premium and Application Fee
Mortgage loan insurance will be necessary if you have a high-ratio mortgage (less that 25% down payment). The application usually costs $75 with a valid appraisal, otherwise it's $235. The actual insurance premium will range from .5% to 3.75% of the purchase price and is added onto the mortgage.
- Mortgage Broker Fee
Some brokers may charge as much as 2% of the total mortgage to find you a lender.However in most cases the broker is paid by the lender. Buyers with good credit should not have to pay a fee.
- Moving Costs
Whether you've decided to do it yourself or hire a moving company, now is the time to budget for the costs involved.
- Estoppel Certificate
If you're moving into a condominium (complex not necessarily a high-rise) this certificate outlines the condominium corporation's financial and legal state. It will cost you up to $100.
- Condominium Fees
These monthly fees vary from complex to complex. The fees are applied to everything from grounds keeping and carpet cleaning to security personnel and health club maintenance. Depending on the type of structure, these fees will usually be a few hundred dollars.
- Home Inspection Fee
For around $300 or less, depending on the size of your home, you'll receive a complete written report about the condition of the structure. Do your research and hire a reputable firm.Your Re/Max representative can help you with this decision.
- Renovation and Repairs
Your home inspection may indicate the need for some general repairs or a major project. Have some money set aside, particularly if you are purchasing an older home.
- Redecoration
Your taste will be different from the previous owner. Set aside money to paint and wallpaper. Prepare a list of things you can live with, for now, and decorating faux pas that need immediate alteration.
- Water Quality Certification
If you are purchasing a home with a well, you'll want to ensure the quality of the water. This will cost approximately $50 to $100.
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