Is it Possible to Sell a Home with a Mortgage Attached to It?
If you owe money on your current home but are ready to move on to the next home of your dreams, you might wonder whether you can sell it before paying it off. What happens when I sell a house with a mortgage? Does the mortgage need to be paid off before I sell my home?
In this article, we will discuss what you need to know about what happens when you sell a mortgage, with insights on how to gauge the best time to sell and set a good asking price when you still owe a mortgage on your home.
Can a House Be Sold With a Mortgage Attached?
In short, a home can be sold if there is still a mortgage on it. The process of selling a home with a mortgage is going to look the same as selling a home you owe for free. The difference is that the money that is still owed to your mortgage lender will come out of the sale proceeds. When it comes time to sell, there are steps you should consider following to properly evaluate how much equity you have in your home.
How Can I Sell a House With a Mortgage Attached?
1. Check the Value of the Home
Before you list your house, we recommend starting by getting a general idea of how much your home is worth. A professional real estate agent can provide an exact number using a comparative market analysis (CMA) that will analyze the value of your home based on comparable sales. The report can help you determine what the asking price of your home should be when it comes time to sell.
2. Contact Your Lender
You will want to find out how much you owe on your mortgage still, so make sure to communicate with your lender. The mortgage company will be required to provide the total amount required to satisfy the mortgage debt on a specific date, a figure known as the payoff amount. Make a call to your bank and request a payoff statement, which will include the amount of interest owed until the day you plan to make a full payment of the loan. When you close on your home, the escrow company will coordinate with your lender for an updated payout amount and use your home sale funds to pay off the debt entirely.
3. Get an Estimate of Your Net Proceeds
When you have a home value estimate and your mortgage payoff, you can utilize tools like a Net Proceeds Calculator to help you get a good idea of the estimated cost of selling your home and the net proceeds that can be earned from the sale. Your agent can prepare a net sheet for you, which will help you account for local feeds and costs that are specific to your area. You won’t have the exact breakdown of credits and fees for the sale until you get your settlement statement at closing.
4. Work Closely with a Good Real Estate Agent
Find yourself a top-rated real estate agent who can help you through the steps of selling your home with a mortgage. Working with a professional who has the knowledge to provide you with good advice is going to be invaluable during your home-selling experience. To narrow down a list of potential agents, you can easily access ratings and reviews for free. Interview between two and three agents to find one whose communication style fits your own.
5. Set an Asking Price for the Home
With the help of your agent, it is time to think of a reasonable asking price for your home. The price should be in line with the expectations of the market while also reflecting what a real buyer is going to want to pay. Price too high, and the home might sit on the market too long. To set the ideal asking price, look at comparable properties in the market. While you might have a sense of what your home is worth, your agent can provide a CMA that packages key pieces of information, with the sale price of nearby homes and local market trends included for a full overview.
6. Look Over Your Settlement Statement
A final step in selling your home is looking over your settlement statement, which is an itemized list of fees and credits that summarize the finances of the transaction. You won’t have to worry about whether or not your lender gets paid, as when your house becomes the buyer, the escrow company will receive the funds and write a check to your lender directly.
Bottom Line
Selling a home with a mortgage happens more often than not! Some homeowners stay long enough in their home that the mortgage gets paid off by the time they sell. However, you are not required to stay in your home until that happens. A house is going to be worth more when you sell it than when you purchase it, which is the beauty of owning a home. Having a trusted real estate agent at your side can make the process all the smoother, ensuring that your home is sold so that you can get into the new home of your dreams. Trust the real estate professionals at Palm Beach Coastal Realty to guide you in finding and settling down in the home of your dreams in the many beautiful waterfront communities that make up Palm Beach Gardens, FL, today.