Buying a home is exciting, but it also comes with a bunch of terms you might be hearing for the first time. One of those is closing costs.
If you’ve been wondering what is closing costs or how much they might affect your budget, you’re not alone. Many homebuyers, even experienced ones, are surprised when they see the final bill.
This guide breaks down what are closing costs for buyers, what they include, and how to prepare for them, whether you’re buying your first home or refinancing your mortgage.
What Are Closing Costs?
There are fees that you need to pay when you buy a house. Before you get the keys, you have to pay these fees and costs. They pay for everything, from taxes and court fees to debt settlement and title insurance.
Think of them as the “final step” costs in making a home officially yours.
Most of the time, these fees make up 2% to 5% of the home’s price. You might have to pay between $10,000 and $25,000 to close on a $500,000 home.
What’s Included in Closing Costs?
To help you better understand closing costs, here is a list:
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Legal Fees
A real estate lawyer or notary public will need to handle the paperwork and make sure everything is legal.
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Home Inspection and Appraisal
Most of the time, the lender needs these to confirm the property’s worth and condition.
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Title Insurance and Search
This helps both you and the lender in case there are problems with the title of the property, such as unpaid property taxes or disagreements over who owns the property.
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Property Transfer Tax
This can be a big part of your closing costs in some provinces, like British Columbia, if you’re not a first-time buyer.
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Mortgage-Related Fees
This can include lender origination fees, credit report charges, and application fees, often called mortgages closing costs.
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Prepaid Expenses
Such as property taxes, homeowners insurance, and interest that accrues before your first mortgage payment.
What Are Closing Costs for Buyers vs Sellers?
The closing charges are paid for by both parties, but buyers usually pay more.
Buyers Pay For:
- Land transfer tax
- Home appraisal
- Mortgage application fees
- Legal and notary fees
- Title insurance
Sellers Pay For:
- Real estate agent commissions
- Outstanding utility bills or taxes
- Lawyer fees
- Mortgage discharge fees (if applicable)
Pro Tip: Ask your online mortgage broker to help you estimate these costs early on.
Do You Pay Closing Costs When Refinancing?
Yes. There are still closing costs when you refinance your home. Some of these are:
- Appraisal fees
- Title search and insurance
- Legal fees
- Lender fees
Although refinancing might help you get a better interest rate, factor in these costs to determine if it’s financially worth it.
How to Reduce Your Closing Costs?
Here are a few strategies:
- Compare lenders: Some offer better rates or reduced application fees.
- Ask about rebates: First-time homebuyers in BC may qualify for full or partial exemption from property transfer tax.
- Work with a trusted mortgage expert: They can help you understand and potentially negotiate certain costs.
Work with Experts Who Simplify the Process
Want to buy or refinance? Having someone help you with the paperwork, numbers, and due dates is helpful. We can help with that at quickmortgagesbc.
QuickMortgagesBC helps you find the best mortgage products and advice, whether you’re looking to buy a new home or refinance your current one. It’s faster and easier than going it alone.
They are a smart, flexible, and open online mortgage broker made for modern consumers. They work with people all over British Columbia who are buying or selling homes.
Final Thoughts
So, what are closing costs really about? It’s more than just another fee, it’s a collection of essential steps that protect your investment, your lender, and your new home.
Since you know how much mortgage closing costs, you can prepare ahead of time, avoid unpleasant surprises, and feel more sure of your real estate trip.
Ready to start your homebuying or refinancing journey?
👉 Visit quickmortgagesbc to connect with a trusted expert and get clarity on your mortgage and closing costs today.
FAQs
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What is included in closing costs?
Costs related to getting a mortgage, legal fees, title insurance, assessment fees, and property taxes are some of the things that make up closing costs.
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Can closing costs be rolled into the mortgage?
On the other hand, some lenders will let you include closing costs in your mortgage. This will make your loan amount bigger, though.
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Do first-time buyers get a discount on closing costs?
In some places, like British Columbia, people who are buying their first home might not have to pay any or all of the property transfer fees.
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Who pays more, buyer or seller?
Most of the time, the buyer pays most of the closing costs. But owners also have to pay legal fees and make money from the sale of the house.
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Are closing costs tax-deductible in Canada?
In most cases, no. But you can deduct some costs related to buying investment homes or refinancing. Talk to a tax expert about this.
