The seven things you need to know when selling your home and why they are important!
Written By Gene Checora
LAST PAYMENT- On the day of closing, you are responsible for making the last payment on the mortgage on the home you are selling. The reason is that mortgages work on an arrears basis. Mortgages differ from rent in that they have to earn the interest before they can charge you for it. Be sure to calculate this into your payout costs. Remember that when you took out the mortgage, you did not have to make the first payment until the month following. This is accrued interest owing!
PAYOUT PENALTY- Most mortgages have payout penalties which are usually three months interest or the interest lost differential. Ask your bank for a payout statement. This will affect the amount of cash you can expect from the sale. Knowing that there is a payout penalty is not enough, it is better to know what it will be in actual dollars.
REAL PROPERTY REPORT- Most banks will want a Real Property Report and Compliance Certificate. If you don't have it, the bank won't finance the sale of your home and the buyer may fear it won't comply. This makes buyers nervous. Check your documentation to see if you have the RPR with compliance. Some sellers have opted to offer Title Insurance in place of an RPR. Title Insurance is often used in quick closing situations. If youre not sure what to do, contact Gene Checora on the Contact Page.
GST COSTS- The sale of your home is not subject to the Goods and Services Tax, however Realty Fees, Legal Fees and any other services provided in the sale of your home are subject to GST. Add the GST to your selling costs to arrive at your real net funds received.
MORTGAGE ASSUMPTION- In Alberta, all mortgages are deemed to be assumable, however most mortgage companies now have a due on sale clause. This means that the mortgage has to be paid out on sale of the property. Some mortgages can be assumed outright while others call for the buyer to qualify to assume the mortgage. If your mortgage is CMHC insured, allowing the assumption of your mortgage would depend on the amount of down payment being offered and what your mortgage says about assumptions. Before selling, review your mortgage to be sure you understand whether it can or cannot be assumed.
CLOSING DATE- Where possible, strive for the closing date to be the first of the month. The reason is that you will avoid misunderstandings about interest adjustments for both you and the buyer. Also, it avoids disputes between lawyers as to cash to close the transaction.
URW- Stands for Utility Right of Way. This needs to be disclosed to the Buyer as well as any other easements which are registered on the Title. Not doing so could cause the sale of your home to fall through on closing date. If you do not have a copy of your Title, ask your Realtor to get one for you or request a copy from any registry office.
For more on selling your home, click on the main Button "Selling"
This report is courtesy of Gene Checora, Owner/Broker of Genner Realty Limited.
For questions or further details, you may contact Gene at 780 459-6957 or email him by Clicking Here .