Costs incurred before or on the date of closing of your home purchase are referred to as "closing costs". Many home buyers are "surprised" by closing costs when these costs are incurred. Failure to budget for closing costs may result in scrambling for cash at closing or missed closing dates.

Below is a break-down of closing costs and when they are incurred.

Costs Incurred Before Closing:

• Appraisal
• Home Inspection

Costs Incurred At Closing:

• Land Transfer Tax
• Lawyer Fees
• Title Insurance
• Tax (PST) on Default Insurance Premium (CMHC Insurance)

Optional Costs:

• Moving costs
• Survey (it's needed whenever you need to apply for a building permit)
• Minor Renovation (e.g. a fresh coat of paint, small fixes)

These are typically referred as "Out of pocket costs" (i.e. paid by the buyer):

• Land Transfer Tax
• Lawyer Fees
• Tax (PST) on Default Insurance Premium (CMHC Insurance), if applicable
• Home Inspection

Lenders usually offer to pay the following costs when it comes to a home purchase:

• Appraisal
• Title Insurance

Ontario Land Transfer Tax ranges between 0.5% to 2.5% of your purchase price depending on the value of your home. If you are buying in the City of Toronto - in addition, you also have to pay an additional City Land Transfer Tax, which has similar rates as the Ontario. No, it's not a typo, Toronto buyers essentially pay double.

However, you will get a rebate (from the Province as well as the City of Toronto) if you are a First Time Home Buyer.

First Time Home Buyers can get up to $4,000 rebate for provincial land transfer tax and up to $4,475 for municipal tax. So, if you are a First Time Home Buyer and are buying in the City of Toronto, you can get up to $8,475 rebate from your Land Transfer Tax.

On average, legal fee of closing a home purchase cost around $1,500.

Having said that, lawyers are being paid by the hour, so it really depends on the complexity of your purchase. Sometime if there is a delay in closing, or your lawyer has to file extra paperwork that takes more time, the legal fee can be higher.

Home Inspection is usually listed as a "condition" in order for the purchase offer to be valid. It is usually done after a purchase offer has been accepted, but before it's "firm". The purpose of the home inspection is to ensure the home you are buying is in good condition. If there is any major issue, such as leaks in the foundation, mould, etc., as a buyer you have the option to back out or negotiate a lower price.

For example, your purchase offer just got accepted, subject to conditions. Typically, you will have 5 days to fulfill the conditions, including a satisfactory home inspection and confirmation of financing. Now as a buyer, you need to order a home inspection and ensure you are comfortable with the results within the 5-day period and confirm to the seller that your financing is in place.

Typically, it costs between $300 to $500.

However, home inspectors are also paid by the hour. So,it really depends on the size of the home, and sometimes, there is also a premium charged for remote locations to compensate for the time it takes to get there.

An appraisal is usually needed before you finalize your mortgage. Your lender needs an "independent valuation" on the price of your newly purchased home to ensure you didn't overpay by too much.

If the price you paid is way above the market, and the lender funded your mortgage based on how much you paid, the lender may be "underwater". It means the mortgage amount may be more than what the house is actually worth. Getting an appraisal is the lender's way to control this risk.

Typically, it costs between $350 to $700.

Similar to a home inspection, it varies depending on the size and the location of your home. Fortunately, lenders usually pick up the tab when it comes to appraisal cost.

It is an insurance policy that insures the owner of the property and the lender against title fraud or title defect. It is a standard practice, and highly recommended, for every borrower to get a title insurance. This is also a cost that is typically paid by the lender.