Buyer’s Closing Costs

28 05 2010

Can Buyers Get Sellers to Cover Upfront Closing Costs?

Buying a home can involve much more money than just the down payment. There are costs that are incurred in the process and transaction of real property. Insurance, title policies, inspections, and lawyer fees, just to name a few.

These “closing costs” are additional to the purchase price of the property. For sellers, its generally deducted from the funds received from the transaction.

These fees can add up fairly quick with taxes and transfer fees, credit reports, appraisals, agent commissions, loans, prepaid interest, etc.

Recurring costs are those that are paid periodically at set intervals such as property taxes or insurance. Hence, non-recurring fees are those that are paid once.

How Much Are Closing Costs?

Generally, closing costs when buying a home can be anywhere between 2-4% of the purchase price. It depends on the loan and stipulations of the loan agreement and what kind of a mortgage loan you got approved for.

The closing costs for a $300,000 home, depending on the type of home, can be anywhere from $3,000 to $12,000 +.

Upfront non-recurring closing costs

One-time charged fees in the closing process can be:

  • Mortgage Loan Insurance Premiums (Depending on how much down payment you put down)
  • Appraisal Fees ($250-$350)
  • Deposit (Part of your Down Payment) (up to 5% of purchase price)
  • Down Payment (Minimum 5% of purchase price, and 20% for investment properties)
  • Estoppel Certificate fee (Status Certificates for Condominiums – $100)
  • Home Inspection Fee (Approx $500)
  • Land Registration Fees (Land transfer tax, deed registration, tariff or property purchase tax – check with lawyer)
  • Property tax/utility bills
  • Surveys ($1,000 – $2,000)
  • Property Insurance (Ask mortgage lender)
  • Water test/septic tank (Can be negotiated with seller)
  • Legal fees (minimum $500+ GST/HST)
  • Title Insurance

Recurring Closing Costs

  • Fire Insurance
  • Flood Insurance (if required)
  • Property Taxes
  • Mortgage Insurance Premiums
  • Prepaid Interest

Can the Seller Credit the Buyer for Closing Costs?

Check with your mortgage lender before you negotiate what would involve the seller’s credit because the lender might not allow it. Depending on your credit score it can be from 3%-6% of the purchase price that the lender might allow a borrower to receive cash from a seller at closing.

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