If you are thinking about buying a home you need to do your homework. The first thing that you should put down on paper is your budget. When creating a budget you will need to jot down all of your money coming in and the money coming out. There are various costs incurred when buying a home, and the last set of costs to be encountered before the keys are handed to you are the closing costs.

Land Trasfer Tax: n Ontario the land transfer tax is set at 2% of the home's purchase price. An additional 2% is added to the land transfer tax if you are buying a home in Toronto.

Legal fees: All real estate transactions involve a legal aspect in which a lawyer is hired to handle all the documents and contracts. The lawyer will also do a title search. The title search is necessary to check whether the seller can actually sell their home and if there are any liens against it. The lawyer is also responsible for registering the deed and mortgage for you.

Refunding the seller's advance payments: You may need to refund the seller for payments they have made in advance which may include; property tax, utility payments, and condo maintenance fees.

Insurance costs: The most common three different insurance policies that home buyers will need to purchase are; home insurance, title insurance (to protect against fraud), and mortgage insurance if your down payment is less than 20% of the sales price.

If you are purchasing a newly constructed home, there are additional closing costs that you will face which are:

HST: You are required to pay a 13% HST if you are purchasing a new home.

Tarion Warranty fee: Sometimes this warranty fee is included in the purchase price yet other times it is paid separately during the closing process.

Phantom rent: If you move into the condo before the condo is registered with the condo corporation then you will be required to pay this fee.

After reading the above you are now familiar with the closing cost component that you will need to incorporate into your budget. However, you should also look into pre-closing and after-closing costs.

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