Updated: May 13, 2021
When purchasing a home, people often are unaware of the additional expenses that they are responsible on top of the down payment. These are commonly referred to as closing costs and lenders generally require you to show that you have access to 1.5% of the purchase price for closing costs. That would mean if you were buying a home for $300,000 you would need to have access to $4,500 for closing costs on top of your down payment. It is important to note that your closing costs could be more. Below are the expenses associated with closing costs.
Appraisals are not always a requirement of the lender you choose, but it’s fair to estimate a cost of $200-$350 in an urban center. If the home is in a more rural area, the cost could increase to $450 or more depending on the location of home in comparison to the appraisal company and the travel time required.
Mortgage lenders do not require home inspections, but is strongly suggested that you have one completed as your home purchase is such a huge financial obligation and you want to ensure there are not any unexpected faults or defects which could potentially be very expensive. The cost associated with a home inspection can vary from company to company and generally cost $300-$600.
It is a requirement to use a lawyer to complete a home purchase and this generally will cost $1,000-$1,5000. The lawyer will look after registering your mortgage, conducting a title search and obtaining title insurance and creating a statement of adjustments.
Land Titles Fee
There are fees associated with registering your legal documents in regards to purchasing your home. These are arranged by your lawyer and are 0.3% of the value of the property. If you purchased a $300,000 house your land titles fee would be $900.
Title insurance would be obtained by your lawyer during the closing. Title insurance protects you and the lender from possible title fraud, or defects which may occur with the title. With the increase in real estate fraud, title insurance protects your interests in your home. Title insurance is around $250 and well worth it.