Wednesday, March 9, 2011

A shout out to my fellow industry members, this is basic stuff!


Last week I received a call from someone that was selling their house and was already working with a mortgage broker but wanted a second opinion.
You see, she had listed her house for sale, via a real estate agent and was pre-approved by a mortgage broker.
She was planning on paying out her mortgage and getting a new mortgage on the new house for credit reasons.
The reason that she phoned me was that her mortgage broker originally told her that her payout penalty with one of the big banks would be $2,000, thus leaving her enough money, after all was said and done, for a down payment on her new house.
The problem was, when this woman phoned her bank directly, she was told that her payout penalty was significantly higher than $2,000.
Let me point out that I would NEVER calculate a mortgage penalty for someone...simply because this is what can happen. Banks calculate penalties in different ways so it’s important to obtain a penalty quote directly from the bank itself.
I asked this lady if her Realtor or Mortgage Broker had taken a few minutes to calculate what her net proceeds would be after she sold her house. No one had! I was absolutely shocked. Now, I don’t like to slag my industry members but this really isn’t acceptable. I got out my form and went through the calculations with her, coming to the conclusion that if she sold her house she actually wouldn’t end up with enough money to purchase a new home. How disappointing for her, and the whole thing could have been avoided had her Realtor and Mortgage Broker done some very basic calculations.
For anyone out there that has a house for sale and needs to know how to figure out their net proceeds, you can use the form below. Please note that these calculations are approximations but should give you a general idea of how much you will net after all is said and done.

Net Proceeds from Sale:

Use this form to figure out approximately how much money you will receive after all of your selling costs have been paid out. This is a great form to use to estimate the amount of funds you will have leftover for the down payment on your next home!


Name:_________________________________________________________ Date:__________________________
Address:________________________________________________________
Projected Sale Price:______________________

Annual Property Taxes:_______________________
Mortgage Balance:______________________________________________

Interest Rate:_____________
Approximate Gross Equity:____________________

Projected Close Date:_____________________

ESTIMATE OF CLOSING COSTS:
 Real Estate Commissions (please ask your agent for %) $______________
 GST on Real Estate Commissions $______________
 Legal Fees $______________
 Property Tax Balance Owing $______________
 Discharge Penalty on Mortgage $______________
 Repairs etc. $______________
 Other $______________

ESTIMATED CLOSING COSTS: $______________
Projected Sale Price: $______________
ESTIMATE OF NET EQUITY: $______________

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