Closing Costs

July 13, 2021 | Posted by: Sherry Corbitt

With any type of home loan, there will be some closing costs involved. Of course, depending on what type of loan you have, there may be less or more costs. Typically though, closing costs will be between 1-5% of the loan amount. 

Understanding some of the main and common fees Durham lenders look for and each type of loan though can help make you aware and prepare.

Lender fee

An amount of your closing costs will go towards the lender that is involved in your mortgage. This cost covers them taking care of your loan and also for their business related costs, such as employee costs. Their budget will be around 1.5% of the purchase price. 

Lawyer fee

A real estate lawyer will be needed for your mortgage, no matter what type it is. They help with dealing with various mortgage tasks and verify that the property’s taxes are up to date. A lawyer can range between $795 and $1,200. 

Appraisal fee

An appraisal is a very important aspect when selling or buying a home. This is to ensure that the house amount is accurate with the house market amount. An appraiser company will complete the appraisal and provide a full report. Appraisal fees can vary, yet they usually range between $400 to $500. 

Title insurance fee

Depending on what type of loan you have or which lender you are with, it may or may not be neccesary. Title insurance protects yourself and the lender against any problems or damages to the ownership of a property. In Ontario, the cost for title insurance is usually around $250.

Land Transfer Tax Fee

This cost will be needed when the ownership of a property changes. The cost goes towards the province and it can range depending on the loan and the purchase price. In Ontario, between 1%-2% of the purchase price goes towards this cost.

Disbursements

This is more of a cost that includes smaller fees. Such fees can include postage, copies, tax searches, and digital execution fees. Your lawyer will likely pay these fees in place for you and then deduct that amount from your bill later. Disbursement fees can range anywhere from $150 to $700, depending on what fees are going to be included in the disbursement. 

After examining some of the main closing costs, it is also beneficial to examine which costs are needed for different types of loans.

Closing Costs for a Purchase

Lender fee: In most cases, especially for a first purchase mortgage, a lender fee will be required. 

Appraisal fee: The house that a buyer is purchasing may or may not need an appraisal, it depends on the situation.

Title insurance: This will be a closing cost if it is a lender requirement. So depending on who you are with for your mortgage, it may or may not be needed.

 Land Transfer Tax Fee: This will always be needed when a property is changing, since it is a provincial requirement. 

 Disbursements: There will certainly be disbursement costs in a purchase. Depending on the house and your loan, the amount of fees can vary. 

Approximate amount for a purchase= $900-$3,000

Closing Costs for a Refinance

Appraisal fee: A homeowner will usually need an appraisal before they refinance their house. 

Lender fee: Not in all refinance cases may a lender fee be a requirement, as everyone’s loan and payments differ.

Disbursements: Similar to a purchase, there will be disbursement costs in a refinance. 

Approximate closing costs for a Refinance= $800-$2,500

These are the most common closing costs for purchase and refinance mortgage loans. It can difficult to esstimate an exact cost amount for a loan, as everyone's loan will be compeltely different. 

If you would like an esstimate of what you closing costs would approximately be, please reach out to me!

Sherry Corbitt, Mortgage Broker



Sources

-Fivewalls (2021). What is Title Insurance and How Much is It? Retrieved from https://www.fivewalls.com/articles/what-is-title-insurance

-Lucas, Tim (2020). Complete Guide to Home Loan Closing Costs. My Mortgage Insider. Retrieved from https://mymortgageinsider.com/how-much-are-closing-costs-7287/

-Pacific Station Notaries (2021). What Exactly are “Disbursements” When it Comes to a Real Estate Transaction. Retrieved from https://www.nanaimonotary.ca/exactly-disbursements-comes-real-estate-transaction/

-Pritchard, Justin (2020). Why Do You Pay Appraisal Fees to Buy or Sell? The Balance. Retrieved from https://www.thebalance.com/appraisal-fees-315707

-Rennie, Lisa (2021). Land Transfer Tax Ontario: What Buyers Should Know. Loans Canada. Retrieved from https://loanscanada.ca/taxes/land-transfer-tax-ontario/

-Super Brokers (2021). Legal Fees and Disbursements. Retrieved from https://www.superbrokers.ca/library/glossary/term/legal-fees-and-disbursements



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