Selling a House With a Mortgage
There are many reasons that people choose to list their homes for sale before they’re finished paying off the home loan. While selling a house with a mortgage may be a little trickier in terms of pricing and making sure you get the maximum equity out of your investment, it can be done. There are just a few things to keep in mind.
Is Selling a House With a Mortgage Possible?
Selling your home while you still have an outstanding mortgage is possible. In fact, many people do this each year, using the money from the sale to pay off the initial home loan and contribute toward a down payment on a new home.
Most mortgages last 30 years, and it’s rare for people to stay in their homes that long. So you can sell a house with a mortgage, you just need to make sure that you’re taking the right steps to ensure that you don’t lose money on the transaction.
What do you need to do to sell a house with a mortgage?
The price you set for your home is one of the most important factors in whether the sale is a success. The first step in selling a house with a mortgage is to call your mortgage lender and find out the outstanding balance. This number can be good for about 10 to 30 days before the next round of interest is applied. Discovering this number is the first step to pricing your home. You’ll want to make sure that you price the house higher than the outstanding balance in order to ensure that you #1 make a profit, and #2 have enough money left over for a new down payment.
Part of the conversation with your mortgage lender should include any “due-on-sale” clauses. These protect the lender by requiring you to pay off your mortgage before the home after selling it, or after transferring the deed to the new owner. You may also have fees for paying off your mortgage early, or “pre-paying” it. In these cases, the price that you set for your home should include making it high enough to cover both fees and the balance of your mortgage.
Once you know how much money you need to pay off your mortgage, then you’ll need to take a look at the housing prices of similar homes in your market. A realtor with knowledge about the maximum price your home can fetch can help you price your house so it’s attractive to buyers.
Can You Sell a House in Pre-Foreclosure?
One reason that someone may choose to sell their house with a mortgage is that they’ve fallen behind in mortgage payments and might be in pre-foreclosure. Selling the house quickly and paying off the mortgage, before you enter foreclosure, can help many families dodge a financial bullet.
As long as you have not been served with foreclosure paperwork, you can still pay off the mortgage loan and avoid having that impact your credit. However, if you know that you’re close to foreclosure, you need to call your mortgage lender and discuss your options.
How Do You Sell Your House With a Mortgage Fast For Cash?
Some people may be in a situation where the need to sell their house, fast. Changes in a family situation, for instance, can cause people to need to sell quickly. Other people may need cash fast due to a death in the family or to settle an estate. Or, you may need to sell your house quickly to move for a job transfer.
If you need a fast home sale, then the traditional listing process may not meet your needs. A cash buyer, an investor or group of investors that have independent financing, may be a better alternative even if you’re selling a house with a mortgage. These investors can close in as little as two weeks, giving you cash up front without working through a traditional lender.
Ready To Sell Your House With a Mortgage?
Selling your home for cash is a viable option for many who are selling their house with a mortgage. Cash buyers don’t have to wait for pre-approval for their purchase, and so can close quickly, on your timeline. Cash buyers also buy your home as-is, so you don’t have to pay out of pocket to make repairs or fix up the house.