Mortgages and hidden costs
Here are a few items that can vary from one mortgage to another, regardless of financial institution.
By Anthony Harte, Dream Homes & Condos Magazine
Property tax re-imbursement
At the close of your mortgage transaction and/or title transfer, it is necessary to have all property-related expenses and fees paid and current. One very important fee is the realty or property tax. The vendor or previous owner of the property will, in most cases, have paid some portion of his/her property taxes to the municipality. The municipality is not obligated to return these monies upon sale of the property, so the responsibility of re-imbursement for taxes paid lies with the purchaser or new mortgagor. Property taxes are the first of all liabilities satisfied in the event of a default in payment or foreclosure. The figure or the amount of monies paid by the vendor or previous owner will vary from mortgage to mortgage and is disclosed in the statement of adjustments provided to your lawyer by the vendor’s lawyer prior to the closing of the transaction. This represents an added closing cost.
New home builder connection fees
Lost in the fine print of some new home builder contracts are the set-up or connection fees. When the builder develops a site, he must bring the necessary heating, water, sewage and related services to each and every home. The builder is charged a fee for the provision and testing of these services, which is passed on to you - the new home owner. The fees for set-up and proper implementation of these services vary as per specific home size, options and requirements. Given the variety of homes and styles existing today, there is quite a difference in fees from project to project. Although the connection fees must be disclosed within the contract of purchase and sale, exorbitant fees may not be highlighted by the sales staff. Typically a condition of the agreement of purchase and sale, the solicitor’s review is an important step in the process, highlighting all key facts within the agreement. These connection fees represent an added closing cost.
Interest Adjustment
Given the variety of lenders and their varied approaches to customer service and/or banking protocol, the interest adjustment is handled and implemented differently at most financial institutions. The typical situation sees a client paying the daily interest component of his/her mortgage payment for a predetermined period normally used to align the mortgage payment with their respective payday.
The payment is typically made at closing and provided to the lawyer. Some institutions will deduct the interest adjustment from the client’s account or debit the client’s preferred account at the desired institution. On occasion, the interest adjustment has been debited inexplicably from the client’s account without giving him/her notice. This and other minimal one-time service fees are lost in the fine print but ultimately disclosed and therefore legitimate. This may represent an added closing cost.
These represent a few of the hidden or otherwise unknown fees associated with the closing of your mortgage. A proactive approach to your personal finance will see some small savings to ensure the smooth and timely close of your mortgage.
————————————————————————————————–———-
Contact the Jeffrey Team for more information - 416-388-1960
