Selling a House With a Mortgage
Posted by: CENTURY 21 Northwest
Date: August 27, 2018
Posted by: CENTURY 21 Northwest
Date: August 27, 2018
It takes a long time to pay off a mortgage. Even those on accelerated plans can still take more than a decade to be free of that particular debt. It’s often hard for many people to wait that long before selling a home, though, and thus they must learn more about selling a house with a mortgage. While it’s certainly easier to sell a house that you own outright, systems are in place to ensure that even those who still have outstanding loans can sell their homes. The only difference in making the sale is the level of complexity inherent in the process.
If you’re wondering how to sell a house with a mortgage, you’re in luck – it’s something that’s done all the time, and most real estate agents are more than ready to deal with this particular complication. If you’d like to make sure that you put yourself in the best position to sell, though, you’ll want to know a little bit more. Knowing more about how a sale works when your house is still under a mortgage is a great way to know if you are really ready to sell your home.
One of the biggest differences in selling a house with a mortgage balance is how you’re going to have to deal with your lender. When you sell a house that’s already free and clear, you’re going to pocket most of your home’s sale price. When you sell a house under a mortgage, though, your first obligation will be to your lender. As such, it’s a good idea to contact your lender for a final payoff amount before you put your house up for sale.
Your payoff amount will tell you a few things about your home. First and foremost, it will let you know exactly what it will cost to discharge your mortgage debt. It will also give you a timeframe for certain fees – you might want to make sure your house sells before certain taxes are due, for example. You’ll also get an idea of the money that’s currently sitting in your escrow account, which should come back to you once the home sale is finally complete.
You’ll also want to make sure that you get in contact with a title agency as soon as possible to start working through that part of the sales process. Because there is absolutely a lien on your home from the mortgage holder, you’ll want to be able to prove that the title to your home is actually free and clear after the sale. Failure to do so can hold up your potential sale and theoretically put you on the hook for much more money.
You’ll be working more closely with a title company when selling a house with a mortgage out of necessity. Luckily, you won’t actually have to fill out too much paperwork if you’re willing to get the ball rolling quickly. It’s always a good idea to talk to your real estate agent before you sell, as he or she can help you to figure out which other professionals will need to be looped in on the process of selling your home. It’s the lien that makes things a bit more complicated, so making sure that its removal through the full payment of your mortgage has to be one of your first priorities.
Once you’ve worked out all the paperwork, you’ll get to the hard part – valuation. Unlike those who have paid off their home, you will be limited in what you can ask in terms of payment. For the vast majority of individuals, it’s not the value of the house that counts as the bottom number, but rather the amount still owed as a mortgage. It’s entirely possible to owe more on your home than it’s worth (also known as being underwater), and you’ll have to figure out if it’s possible for you to recoup any losses if you sell your home.
It’s important to note that you’ll actually be dealing with some math if you are selling a house with a mortgage. Your goal is to reach a minimum sales price that will satisfy your obligations to your lender, to your real estate agent, and to any third parties (title companies, attorneys, etc.) that have to be paid during the process. As such, your minimum sales price will likely be a bit more than what you actually owe on your home and failure to get that price will leave you paying at least part of what you owe out of pocket.
Because you’re dealing with some fairly significant obstacles, you’ll want to pay a great deal of attention to timing. You’ll need to make sure that you’re not only selling your house with a mortgage at a point when the market is hot but one that will benefit you the most financially. For many homeowners, the goal is to sell the house before the next mortgage payment is due – this will not only save you money but might allow you to more easily make any improvements or payments that have to be made in order to help the house get sold.
You will also be under a time crunch to make sure that you’re selling your home before the payoff date given to you by your lender. While this number will likely go down after your next mortgage payment, there are certainly issues that can cause the number to go up. Taxes might come due, for example, or the house might be reassessed at a higher (or lower) value that can impact your home’s sale. The faster you’re able to sell a house that’s got a mortgage, the better. If you wait too long, you might find that the careful calculations you’ve done to break even no longer apply to your situation.
Selling a house with a mortgage is entirely possible. You need to pay attention to your duties to your lender, though, and know exactly what you owe and to whom you owe that money. The more information you have and legwork that you can do before the sale, the better. Making sure you’re in a strong position is the best way to recoup at least something of a profit from your home sale. If you’re ready to sell your home, make sure to contact CENTURY21 Northwest for your home evaluation today.
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