It can be very exciting to sell a home and pay off a mortgage. However, in doing so, it is important to be sure to take all of the proper steps to get yourself discharged from any further liability for the outstanding mortgage payments.
There are three common instances that require you to take the proper steps to discharge yourself from a mortgage.
- If you sell your home
- If you refinance your home
- If you pay your home loan in full
The steps you must take in each are similar. However, the final outcome can vary slightly with each process. First let’s look at the steps you must take in all three of these situations.
- You must contact your lender and inform them that you will be changing your ownership status on your property.
- Tell your lender that you will be either selling your home to a new owner, refinancing your home with a different lender, or paying off your home in its entirety.
- In the instance of refinancing your home, or selling your home, you will need to inform your lender that there will be a new lender involved. You will need to supply them with the contact information for the new lender so that they can contact the new lender to set up receipt of the payoff funds.
The next set of steps involves completing the necessary paperwork to have your mortgage discharged. The lender who holds your mortgage will have specific forms for you to complete. To complete these forms, you will need to be able to supply the following information.
- The full names of the borrowers
- The full names of anyone who might be guaranteeing the loan
- The account number for the loan and any associated home equity loans taken against the home
- Property information
- Any other companies/lenders who will be involved in the transactional changes being made to the status of the mortgage
- The contract for the sale of the property
- The names and contact information for the party buying the property
- Any outstanding property tax information
- Any liens that might be held against the property
Next, it is important to keep in mind that it can take anywhere from 7-14 days to fully discharge a mortgage. Therefore, be sure to leave plenty of time for this part of the process to be fully completed.
In order for the mortgage to be fully discharged the title must evidence who the new owner of the property is. If you are paying off your home loan in full, you will receive a new title indicating you are now the full owner of the property.
If the home is being refinanced, the new lender will hold the title in their name until the home is either sold or paid for in full.
If you are selling the home the title will be transferred to the new owner i.e. the new lender. Or, in this instance, the title ownership could reflect that the buyer is the new owner if the buyer paid for the home in full, sans a lender.
Finally, the new title will need to be properly registered. The registration will require Discharge of Mortgage and Certificate of Title to be registered at the Land Titles office. This can be done by the lender upon receiving the funds to pay off the mortgage, or it can be done by the party who paid off the mortgage.
Be sure to clarify who will be responsible for registering the new title as this is a very necessary part of fully discharging a mortgage.
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