Closing Costs - Underwriting Fundamentals 101

Closing Costs

Today we're going over closing costs and how this can impact you as a buyer.

So when a lot of investors are homeowners purchase a property, they just think mentally in their head of how much they need to have saved for the down payment.

And that's what they work on.

And then once they have that, they get out there and start buying the property.

The challenge is, is that the lenders also require that the homeowner or investor shows the closing costs.

There's multiple reasons for this. Of course, we have the first time homebuyer tax credit and incentives, right where they don't have to pay land transfer tax or it's pro-rated, depending on the purchase price of the home and and location of the property, of course.

But the lenders don't know if the client is a first time buyer or not. So they leave it up to the lawyer to decide.

So to avoid any issues on closing. They want to see that you have the land transfer tax and then obviously the legal fees.

So how do lenders do this Very quickly so what you should know is that they factor in 1.5% of the purchase price as closing costs.

So say you're an investor and you're buying a duplex and you're going to live in one side and rent out the other side.

You can buy that with as little as 5% down.

So in this case, the lender would want to see 6.5% down to make sure there was enough for the down payment and the closing costs.

So you have to know these details so that way they can make sure that you're set up for success when you go out and purchase your next property.

Talk to a Mortgage Professional

Another key thing that a skilled mortgage professional can help you do is cut down on any 'junk fees' in your closing costs.

Often, buyers will find themselves facing multiple unnecessary or duplicate fees that increase your final closing costs.

Let us help you keep your closing costs low by booking your free strategy call with us today.

All you need to do is click the link below to get started.

Watch it on TikTok

@the_unstuck_investor The importance of closing costs #fyp #mortgagetips #mortgagebroker #mortgageadvice #canadianrealestate #canadianmortgagerates ♬ original sound - The_UnStuck_Investor