Estimating Closing Costs

Although the exact amount and types of closing costs will vary with every mortgage loan, there are a few guidelines you can use to estimate your closing costs.  We'll go through them in this article.

1. Lender Fees

Fees will vary from lender to lender.  Your mortgage broker's job is to help you choose the lender with the best combination of rate and fees, from their pool of available lenders.  These fees can range from $0 to $1000, depending on the lender and the applicant.  Examples of these fees are underwriting fees and processing fees.

2. Third Party Fees

These are fees paid to various third party services, independent of your mortgage broker and lender.  Often times these fees are negotiable and your mortgage broker may be able to assist with getting you the best price.  Examples of these fees are appraisals, credit reports and inspections.

3. Title and Attorney Fees

Title searches are mandatory and the fees vary from province to province.  The exact title related fee will be determined by the closing attorney you use.  Attorney fees make up the remaining bulk of your closing costs.  Hiring an attorney is required to close your mortgage loan and if you don't have one, your mortgage broker can recommend one.  Along with performing the title search, an attorney will provide you independent legal advice on the terms of your mortgage deal.  Most have predetermined prices for closing on a mortgage, and their fees also cover the transferring of funds between all parties involved in the deal.

4. Government Fees

Last, but not least, are fees set by government authorities in your particular province and municipality.  Examples could be registration fees, land transfer taxes, city taxes, and other taxes applicable in your local area.

Overall, it's a good idea to set aside approximately $5,000 to cover closing costs when you are buying a home.