What a buyer should expect on closing
Buying a home can be a very exciting but stressful experience with many costs to manage. Most people are prepared for moving costs, legal fees and even re-decorating expenses and they plan for them accordingly. There may also be costs associated with leaving your former residence, such as lease penalties if you’re renting or mortgage discharge fees if you owned your previous residence.
One of the areas where homebuyers – particularly first time buyers – frequently run into problems is with closing costs. They may not properly anticipate the final adjustments associated with closing a real estate transaction. The result can be a “cash crunch” on closing day that adds stress at a time when you need it least.
In addition to your down payment, there are other expenses that must be paid on closing day before your home purchase and the transfer of ownership can be completed. Closing costs are typically one-time-only charges that are necessary to complete or “close” the transaction. These costs may include inspection fees, appraisal fees, title searches, lawyer’s fees and applicable taxes, such as GST. Closing adjustments include the repayment of a portion of any property taxes, utilities etc. that may have been pre-paid by the vendor. You should expect to reimburse the vendor for payments covering the period after your closing date. For example, if the owner paid the final property tax bill for the year on September 1st and your closing date is September 30th, then you’re expected to pay the owner back the amount that covers the three remaining months.
As your Buyer’s Agent, I can help you estimate closing costs before you even commit to making an offer to buy a home. In some cases, the terms for how some of the expenses will be reimbursed may even be spelled out within your offer to purchase. For example, the cost of a new property survey may be paid by the buyer or the seller or even be cost shared. Good preparation of the offer can help to make your closing day trouble free.
There will be some costs, such as cable TV, telephone and home insurance that typically will end with previous owner’s departure. It is the owner’s responsibility to cancel the existing service with no costs owing to you. It is your responsibility to arrange for new service under your own name. Your lawyer can confirm exactly what new services you should arrange for yourself and what services he/she will transfer over to your name for you. Shortly before your closing date, your lawyer should also be able to tell you the exact amount you will be required to pay in addition to your down payment. You will be required to submit this payment before you will be allowed to sign your documents and get the keys to your new home. With a good lawyer and your Buyer’s Agent by your side, there’s one thing that you can expect on closing day – no surprises!
Step 18: Possession and Move
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