What Purchasers Should Know

      The Mortgage

If you have agreed to assume a mortgage or if you have been approved for a new mortgage, your lawyer will deal with the mortgage company directly. The mortgage company will send them all the necessary documents and they will provide you with a copy of the mortgage or the assumption agreement upon closing. They will arrange with the mortgage company for all the funds to be advanced to their law firm and it is through the firm that the mortgage fund will be disbursed. They will require you and your spouse to sign a form authorizing the mortgage company to advance funds directly to their law firm in trust. Further, the mortgage company will not advance funds until they have a certificate of title from their firm. This certificate is similar to the one they provide to you the Purchaser. The Mortgage Company will require a detailed mortgage report as they will be holding the legal title to your home. Your lawyer will forward the necessary documentation on your behalf to the mortgage company upon the return of the mortgage from the Registry of Deeds.

It is important when applying for a mortgage or applying to assume a mortgage that you advise the mortgage officer on first meeting who will be acting on your behalf as your lawyer.

You should make a point to become familiar with the terminology used in your particular financing package, be aware of the interest rate, the term of the mortgage, the repayment schedule, the amortization period, and the prepayment privileges. Is the mortgage "open" and capable of being paid out at any time without penalty, or is it a "closed" mortgage. What are the payout penalties? Is the mortgage capable of being assumed? What are the covenants of the mortgage? What is the outstanding principal balance at the expiration of the term? What are the fees and expenses associated with renewing the mortgage? Is the financial institution paying the property taxes? Is the mortgage portable? What are the fees and expenses associated with the initial mortgage advance? If the interest rate goes down prior to closing, are you entitled to the lower rate? What is the amount of the cheque being forwarded to the lawyer upon closing?

If you are being transferred by your employer, who will be reimbursing you for your moving expenses, you should obtain from your mortgage company a receipt of any money you give them for mortgage application fees, CMHC fees etc.

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