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What's included in the closing costs when buying a new home?

“Always pick your yard based on your Summer lifetstyle.”


December 13, 2018 - Karl Yeh

So you're ready to buy a home and reviewing your budget. What other costs, besides the purchase price of the home, do you need to know? In this episode, we discuss what are the closing costs on a new home including costs for lawyers, landscaping, homeowner association fees and more. We also explore if you can move some of your closing costs into your mortgage. 

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Hi, everyone. I'm Karl Yeh. Welcome to another Homebuyer's School video, a channel where you get the latest strategies, tactics and tips from home buying experts.

And remember, if this is your first time on this channel and you wanna get the latest strategies from the experts, hit the subscription button below, hit the little notification bell so you don't miss anything.

So today I'm joined by Kristy Seibert, Area Manager with Brookfield Residential, and the question we're gonna answer is,;

What are the closing costs on a new home?

Kristy Seibert:                   

Good question, Karl.

So the closing cost typically include lawyer fees, title transfer, and often your builder will cover these fees for you.

So closing costs when purchasing a new home don't always have to be a big burden.

Karl Yeh:                             

Okay. What ... Maybe describe a couple of the fees that we're talking about.

So when you say lawyer fees, what do you mean?

Kristy Seibert:                   

So basically, the lawyer has to be there for any ... to sign any documents, especially with the title transfers, so that's going to transfer the property from the name of the builder to you.

Karl Yeh:                              To you, okay.

Kristy Seibert:                   

And then, as well, to transfer the money from the mortgage, so the purchase amount to be transferred from your mortgage from your bank to the builder.

Karl Yeh:                             

Do you need a lawyer? Do you need to hire your own lawyer or is one already provided, like from a-

Kristy Seibert:                   

Every builder's different, and sometimes even who you're using for your mortgage can effect which lawyer you can use.

But quite often, the builder will provide a lawyer for you, so that's something to ask your builder and see if that's something that they provide.

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Karl Yeh:                             

What other fees, even though, maybe, some builders will take care of it,

What other fees should you be aware of in terms of closing costs?

Kristy Seibert:                   

So there are a few things that could come up.

If your community has a Homeowner's Association, then from the time that you move in you would have to pay the Homeowner's Association.

So it's a set amount per year, the lawyers would calculate, from the day you move in to the end of the year, what that amount would be and that's something that would have to paid at closing.

Another thing to consider would be property taxes.

So typically, the builder will pay the property taxes in full for the year ahead of time. And so, if you're taking possession halfway through the year then you have to pay back to the builder for the time that you are living in the home.

Any hidden fees?

Karl Yeh:                             

Any other costs that ... maybe any hidden fees, maybe not hidden fees, or things that new homeowners don't really ... are aware of, so you've touched on HOA fees, anything else, like landscaping, or?

Kristy Seibert:                   

Yeah. I mean, it's always good to keep in mind what still needs to be finished around your home, so that's something that a new offers, is maybe putting your personal touch on things.

So some builders include landscaping, others don't.

So that's a great question to ask your builder is what's included. Do I need to still account for building a fence, or a deck? Maybe I want to finish my basement afterwards. 

So finishing up your home, those can be extra costs. 

I wouldn't say that they're hidden, but things to keep in mind for how you're using your home and how quickly you want to finish those parts of your home.

Costs for living in a brand new community?

Karl Yeh:                             

And let's say you bought a home in a community, let's say, that's not finished, so have a lot of homes that are still being built.

Are there any costs associated with that, in terms of a brand new community and your one of the first few that actually moved in?

Kristy Seibert:                   

In the sense of your purchase price, quite often in a newer community your purchase price would be a little bit lower than what you would see in a finished, established community.

So there's going to be a price difference, just because the land values are a little bit different.

Karl Yeh:                             

They're different, okay. But are there any other fees that I would need to think about or things that would be passed on to me from the builder? Or no, that's usually ...

Kristy Seibert:                   


So in our purchase agreement, we make sure that it's stated that your home will be passed on to you without anything owing. So anyone that's worked on your home, any of the trades that have done work on your home will have been paid before you take possession.

So no, there shouldn't be any additional costs associated.

Karl Yeh:                             

And if you wanna learn more about the real estate purchase contract, watch our video above.

So Kristy, is there anything else in terms of closing costs, or even fees that first time home buyers, or any home owners need to know when buying a new home?

Kristy Seibert:                   

The only other thing that I would think of is if you made any upgrades after your home purchase agreement was written.

So if maybe you went with the standard appliances when the offer was written, and then a few months later you decided to upgrade your appliances, that cost could be considered a closing cost if it's something that you didn't make your mortgage specialist aware of.

So if it's something that you want to put into your mortgage, then you need to let your mortgage specialist know about that when you add it in.

If not, it is something that you could pay at closing.

Karl Yeh:                             

Now, actually, one final question is,

Could you move some of your closing costs, or additional costs into your mortgage?

So let's say, for example, if there's an HOA fee.

Can you roll that into your mortgage or no, that's completely separate? 

Kristy Seibert: 

As far as I know, it is completely separate.

Karl Yeh:                             

Perfect. Anything else to add?

Kristy Seibert:                    No.

Karl Yeh:                             

Awesome. Well, thank you very much for joining us and we'll catch you next time.


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Let us know if you have additional home buying questions that we can answer by submitting them in the comments section below. 

Homebuyer's School publishes new content weekly so subscribe or check back regularly for the latest information, strategies and tips from homebuying experts. 

About Kristy Seibert:

Kristy graduated from the University of Alberta with a Bachelor of Arts double majoring in Sociology and Human Geography & Urban Planning. After building a new home of her own, she learned more about the process of buying and selling homes and wanted to explore career options in the housing industry. Kristy has been working with Brookfield Residential for 4 years and has sold homes in five different Brookfield communities. She has experience with Single Family, Duplex and Multi-Family homes and enjoys building relationships with her homeowners and guiding them through every stage of their homebuying journey!

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