If you’re both selling and buying a home, there is always the potential that a deal will fall through.
A number of things can go wrong, especially with a long closing date: job losses, illness, buyers pass away, losing loved ones and financing could fall through. A buyer may have been approved for the mortgage months prior but an Appraisal is often done close to the closing date.
The Appraisal of the home will decide if the house is worth the mortgage that is being dolled out. If the bank decides that the homes value is inflated and not worth the amount of the mortgage, financing will be denied at no fault of the buyer.
The seller is then left with two mortgages and is now facing the burden of thousands of dollars they did not intend to pay including legal fees and bank charges. For some it could just mean dipping into savings, for others it may lead to defaulting on a mortgage. All of which can be prevented by investing in home closing insurance.
While this scenario is not at all very common, it might give the selling party piece of mind in a potentially tumultuous time. Canadian Home Shield offers this insurance for $99 and will cover up to $25,000 for up to 180 days from the original closing date. This is enough time to find another buyer and sell your home.
Remember, whether you decide to buy this insurance or not, always ensure that you have proper legal counsel when buying or selling.