Tips on the Real Estate Closing Process

Before you sign on the dotted lines, ask yourself these six crucial questions.

1. What Am I Buying?

Make sure you have done your due diligence and inspected the property thoroughly. This could be the biggest investment you ever make (emotionally as well as financially) so know what you are getting yourself into before you seal the deal.

2. What Sort of Loan Am I Getting?

Before you close you will get a stack of papers ten reams high and you will be signing and initialing every last one of them. Make sure you know what you are signing - is the interest rate the attractive one you were quoted when they were begging for your business? Do you have a pre-payment penalty? When is your first payment due and where do you send it? All important questions to ask and have answers to before you seal the deal.

3. How Much Money Do I Need?

You may have your loan in place, but you will probably have to come out of pocket to close on your new dream home so where is that money coming from and how is getting from THERE to the lawyer's account in order to close on time?

Make sure all parties involved have the proper information to transfer funds, pick up cheques and get it done so your close is not held up while you are already paying interest on your funded loan.

4. Is Everything Turned On?

Have you transferred the utilities into your name and avoided unnecessary costs to have them turned on if there is a gap between you and the previous owner's shut-off date? Ensure that you have addresses, account numbers and all contact information for the following:

-Utilities (electric, gas, water, trash)
-Property taxes
-Homeowner's insurance

And make sure your lawyer has all the information they need (such as contact info for your insurance company) in plenty of time before the close.

5. Did the Previous Owner Hold Up Their End of the Transaction?

You may have negotiated some repairs.  Did you receive a credit for them and is it on your closing statement? Did the previous owner complete the repairs they agreed to do and are they up to code?

6. Am I Aware of (All My) Closing Costs?

When it comes time to close on your property, it may seem as if everyone and his brother is waiting for a handout. They are. All these fees together make up your CLOSING COSTS.

These charges can and do vary widely, but don't be surprised to see these charges:

Property Tax / Utility Adjustments — The buyer must reimburse the seller for any property taxes or utilities the seller paid after the buyer takes possession.

Title Insurance — A lender won't give you any money without guaranteeing its interest in the property. Title insurance covers you in the unlikely event that there's a blemish on your property's title history.

Legal Fees — Lawyers handle administrative details and make sure the title is transferred properly.

Disbursements — These are reimbursements paid to your lawyer for miscellaneous fees like mailing costs, bank charges, photocopies and land transfer fees to register the property in your name.

Moving Costs — This includes the cost of any professional moving services you hire, truck rental fees, moving equipment and any related incidental costs.

Utility Deposits  — You may have to pay fees for switching and setting up your utilities. This could include separate charges for gas, electricity, water, Internet, cable, phone and security systems.

GST  — New homes, substantially renovated homes, and some other circumstances can lead to the payment of GST upon closing.  You may however be eligible for a partial rebate.

Land Transfer Tax  — depending on where the property is located, a land transfer tax pay be payable.