CLOSING COSTS

A Detailed Guide to Closing Costs

SET UP & APPRAISAL FEES:

Conventional Mortgage - approximately $185-$225
High Ratio Mortgage - approximately $235

This fee covers items such as inspection, administration and appraisal. These fees are paid at the time you take your agreement of purchase and sale to your lender.

PROPERTY TAX HOLDBACK: With some mortgages, monies are retained from the final mortgage advance to ensure sufficient funds are on hand to pay any outstanding property taxes (be sure to inquire as to your Lender's policy on this issue).

Tax bills are paid bi-annually, therefore, depending on the time of the billing period, it could mean you might be required to have the cost of one to six months of taxes available as part of your closing costs.

SOLICITOR'S FEE AND DISBURSEMENTS: Legal fees vary. It is suggested that you discuss fees with your solicitor beforehand to be certain of your cash requirements. You should also inquire as to whether the stated fee includes disbursements such as courier costs, title search, registration costs, etc. Please note: Costs could possibly be covered by the Government if you are employed by the Government.

DEED TRANSFER TAX: This tax may vary by municipality. However, in the cities of Halifax, Dartmouth and Bedford, as well as in Halifax County, the Deed Transfer Tax is 1.5% of the purchase price.

Example:    On a purchase price of $150,000, the Deed Transfer Tax would be $2,250 ($150,000 x 1.5%).

*Hants County tax is one half of 1%.

LAND SURVEY: A survey of the property by an accredited land surveyor is required. This is necessary to establish that the property is located within the specified legal boundaries and complies with local building bylaws. The survey cost is approximately $400, but may be more if it is complex. It may be advisable to discuss this requirement with your solicitor. A solicitor who deals primarily in real estate may be able to arrange for this service at a reduced cost.

On an existing house, ask your solicitor or Realtor to check with the present owner to see if a survey is already available (most lenders will accept the existing survey certificate and you may be saved this cost, if you are prepared to accept this). If a survey certificate is available, there is no warranty by the vendor as to its accuracy when passed on to a purchaser.

*On employee relocations, the cost of a new survey may be covered in the relocation policy.

CLOSING ADJUSTMENTS: When buying a house, be sure to consider necessary adjustments between the seller and yourself for such things as property taxes and fuel. Your lawyer will discuss these costs with you.

Fuel adjustments are usually done when the seller "tops" up the fuel tank prior to closing and the purchase pays for a full tank of oil.

Tax adjustments, i.e. the seller has paid property tax to the end of the taxation year. The property closes two months before the end of the taxation year. There the purchaser rebates two months taxes to the seller.

Discuss with your lender at the time of your mortgage application what amount the lender will want withheld by the lawyer on closing for tax adjustment.

PROPERTY INSURANCE: You will have to maintain fire and extended coverage insurance for the amount of the oustanding balance of the value of the building, whichever is the lesser. The cost will vary with property value, insurance company, municipality, etc. Your insurance broker can help out there.

Please notify your lender and your solicitor as to who your insurance company is, as well as the contact person at the company.

ACCRUED INTEREST: Normally, mortgage interest is calculated from the first of the month to payment date, therefore when you close on other than the last day or first day of the month, you will pay interest to the first of the following month. For example, if the closing date is May 20, you will pay interest from May 20 to June 1 (12 days). Most lenders collect this on closing date through the solicitor, therefore, you should be aware of this amount and be prepared to pay this at the time of closing. This may vary slightly if you have chosen "other than monthly" payments. You should discuss this with your mortgage counselor.

MORTGAGE LIFE INSURANCE: This is insurance to protect co-owners in case of death. Often mortgages are based on two income earners. Should something happen, life insurance gives your co-owner the protection of the mortgage being paid off. Mortgage insurance can be obtained through your lender or your insurance broker. It is wise to investigate both avenues and compare prices.

Mortgage life insurance can be obtained through your mortgage lender and be a small monthly cost added into your mortgage. Mortgage life insurance can also be obtained through any large insurance company with a policy where you will pay a premium. The advantage of this insurance is that once in place it will cover your needs for the next many years no matter which home you own, your age or changes to your health.

WATER TESTS FOR PROPERTIES ON WELLS: It will be a requirement of your lender for the water in a well to be tested for bacteria and in some cases, they may require tests for other chemical content. Water tests are usually done in conjunction with mortgage financing. As purchasers, you should be present with your Realtor when the water samples are taken. Water samples should be taken only in Department of Health containers and returned to the Department of Health as soon as possible. Should it be necessary for the samples to sit overnight, it is important that they be refrigerated. The cost of samples are as follows:

ARSENIC (Environmental Chemistry) - $8.50
BACTERIA (Bacteriology) - $12.00

HST: When applicable, check with your lawyer or Realtor.