understanding these costs can help you plan your budget and avoid surprises
What Are Closing Costs?
Closing costs cover various administrative, legal, and financial fees associated with transferring home ownership. These costs are typically due on closing day—the day the home officially changes hands.
Who Pays Closing Costs?
Both buyers and sellers have closing costs, but they cover different expenses. Buyers usually pay more in fees, while sellers cover costs like real estate commissions.
Closing Costs for Home Buyers
Buyers in Winnipeg can typically expect to pay 2%–4% of the home’s purchase price in closing costs. Some common expenses include:
• Land Transfer Tax: A provincial tax based on the home’s purchase price.
• Legal Fees: Covers the cost of a real estate lawyer to review contracts and complete the transaction.
• Title Insurance: Protects against title issues, such as ownership disputes or fraud.
• Home Inspection Fee: If not already completed, this ensures the home is in good condition.
• Appraisal Fee: Required by some lenders to confirm the home’s market value.
• Mortgage Default Insurance (if applicable): If your down payment is less than 20%, you’ll need mortgage insurance.
Adjustment Costs: Reimbursement for prepaid property taxes or utilities paid by the seller.
Closing Costs for Home Sellers
Sellers typically pay 5%–6% of the sale price in closing costs, primarily due to:
• Real Estate Commissions: Usually the largest expense, covering both the buyer’s and seller’s agents.
• Legal Fees: Covers the cost of a lawyer to handle the paperwork and ensure a smooth transaction.
• Mortgage Discharge Fee: If you’re paying off a mortgage early, there may be penalties or discharge fees.
• Property Tax Adjustments: If you’ve prepaid property taxes, you may be reimbursed by the buyer.How to Reduce Closing Costs
• Shop Around: Compare legal fees, home inspectors, and mortgage lenders for the best rates.
• Negotiate: Some fees, like title insurance or lender costs, may be negotiable.
• First-Time Home Buyer Programs: Some programs offer rebates or tax credits that can help offset costs.
Be Prepared for Closing Day
Knowing your closing costs in advance ensures a smooth transaction with no last-minute financial surprises. If you have questions or need guidance, I’m here to help!