Demystifying Closing Costs: A Guide to Home Buying Expenses in Calgary, Alberta"

When embarking on a home search and eventually becoming a new homeowner, there are various costs to consider, commonly known as closing costs. In Calgary, Alberta, these closing costs can vary, and it's essential to be aware of what to expect. Here is an overview of the typical closing costs in Calgary:

1. Home Inspection:

For an average-sized home, the cost of a home inspection ranges from $400 to $700. It is advisable to invest in a home inspection to identify any potential issues and gain peace of mind. Condo inspections are usually cheaper, ranging from $200 to $400.

2. Home Inspection on a New-Built Home:

It is recommended to have a home inspection even for brand-new homes, as it allows any deficiencies to be addressed by the builder.

3. Additional Costs after the Home Inspection:

If any significant issues are discovered during the home inspection, additional testing or consultations with certified professionals may be necessary, incurring extra costs.

4. Condo Document Review:

When purchasing a condo, a condo document review is crucial. Specialized companies in Calgary charge approximately $300 to $500 to examine the bylaws and financials of the condo.

5. Water Well and Septic Field Test:

For acreages, it is strongly advised to have the water well and septic system tested. The cost for a septic system inspection ranges from $350 to $500, while a well inspection can cost between $1,000 and $1,500.

6. Lawyer:

Hiring a real estate lawyer is a standard part of the buying process. In Alberta, the average cost of a lawyer is around $1,500, which includes tasks such as fund transfers, title checks, and registration.

7. Realtor Fees:

Realtor fees are typically paid by the seller, but there may be cases where the buyer needs to cover a shortfall, primarily with discount brokerages, builders, or self-represented sellers.

8. Appraisal Fee:

Many lenders require an appraisal to assess the property's value before lending money. The appraisal cost ranges from $200 to $400, and it may be covered by the lender or paid by the buyer.

9. Mortgage Insurance:

Mortgage insurance premiums vary based on the buyer's down payment. If the down payment is less than 20%, a premium is charged. Different mortgage insurance companies offer similar rates, such as CMHC.

10. Land Transfer Fee:

Alberta does not have a land transfer tax but charges a land transfer fee, which varies based on the home's value. The real estate lawyer handles these fees, and the buyer reimburses them.

11. Title Insurance:

Title insurance protects against potential issues with the property's title and costs around $200 to $300 for the average home. The buyer typically reimburses the lawyer for this expense.

In addition to closing costs, it's important to consider ongoing costs for homeownership:

- Home Insurance: Required by lenders, it covers damage to the property and is paid annually.

- Property Taxes: Vary depending on the property and community.

- Condo Fees: Monthly contributions for maintenance, improvements, and services in condo buildings.

- HOA Fees: Some communities have Home Owners Association fees for community upkeep and amenities.

- Utilities: Monthly costs for gas, electricity, water, and sewer services.

- Maintenance: Every home requires ongoing maintenance, and associated costs vary.

Keep in mind that these costs are subject to change, and it is essential to consult with professionals for accurate and up-to-date information.