Buying property can be a complex and confusing process filled with new terms, hidden fees and a shocking price tag. Mortgage closing costs can be one of those things you overlooked when planning to buy. Mortgage closing costs are something that you will have to pay before purchasing a home or if you are refinancing your existing mortgage.
So, What Are Closing Costs?
Closing costs are all of the fees that you must pay for the loan required to purchase a property. Included in the closing costs are property taxes, mortgage insurance, broker fees, title insurance, lawyer fees, federal and provincial taxes, and more. To have a clear understanding of the fees you’ll be responsible for, in addition to your down payment, speaking with a mortgage broker is your best plan of action.
Just understand that mortgage closing costs are all the fees required when buying a home. This covers inspection fees, legal fees, and taxes. It’s not just the seller or lender who’s receiving this money.
How Much Are Closing Costs?
Closing costs generally end up costing between 2-5% of the purchase price of your home. These fees vary based on your location and loan type so it can be helpful to discuss closing fees with a mortgage broker well in advance.
There are many mortgage closing cost calculators out there where you plug in amounts and interest rates. These can be helpful to give you an idea of the money you’ll need up front to purchase a home. However, you’ll need to know a lot of things you may not have thought about before. You need to know if your future home will be a condo. Are you a first-time home buyer? What’s the interest rate on the loan? What year was the property built in? All of these things will be considered when estimating your closing costs. You likely won’t have answers to many of these questions. A qualified mortgage broker can help you plan for a few different scenarios, so you feel like you have the money set aside for the perfect home when you start your search.
Closing costs are not something that you can avoid, either. There can be some ways to minimize them to keep your costs low, but in the long run, many of the fees in the closing costs benefit you. A mortgage is a big undertaking and the closing costs help to make sure this loan is insured and the home you buy is safe before you sign on the dotted line. Make sure you shop around and speak with professionals about these fees, so you understand what you’ll be paying for.
Things can quickly become overwhelming in a fast-paced real estate market like Victoria, BC. Make sure you speak with a reliable and knowledgeable mortgage broker in Victoria, BC about your home ownership goals and the closing costs associated with your purchase. If you’re interested in getting an estimate or understanding the closing costs specific to your situation, get in touch today.
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