What Happens to Your Mortgage When You Sell Your House?
Wondering, “How can I sell my house fast in Chattanooga?” Contact Chattanooga Property Solutions today!
As a homeowner, there are many reasons why you might want to sell your home before your current mortgage is fully paid off. The average mortgage term is 30 years. Living in one place for that long may not be appealing to you. As your family expands or as your job situation changes, you may want to sell your house and move elsewhere.
So, what happens to your mortgage when you sell your house? Is it possible to sell your house without paying off the mortgage? We’ll cover the details in this post.
Selling Your House With a Mortgage
It’s perfectly normal to sell your house with the mortgage still active. Many homeowners sell their properties before they’ve cleared their mortgages. What happens to the mortgage in that situation?
In many cases, the money realized on the sale goes toward paying off the mortgage. Any money remaining afterward is your profit from the sale. This scenario only works if you have equity in your home. You’ll only have equity on your home if the value is more than the amount you owe on your mortgage.
So, if you owe $200,000 on your home that is now valued at $500,000, your equity is $300,000. If you sell the property for $500,000, $200,000 will go toward clearing your mortgage debt first, while the balance will go to you. Keep in mind that closing costs will eat into your profits.
If the home value doesn’t cover the outstanding mortgage, you’ll need to find other sources of funding to offset the mortgage or risk a short sale.
What happens to your mortgage when you sell your house without paying off the mortgage balance? You can’t sell the house in the first place without the lender knowing.
If you have to sell your home with the mortgage active, the lender must be involved in the process from the start. You’ll need to get the payoff statement, which will detail the outstanding balance on your mortgage.
Additionally, the buyer pays to the escrow account. Therefore, you won’t receive the sale proceeds until all necessary deductions are completed.
Is It Possible To Transfer a Mortgage to a Buyer?
Yes, you can transfer a mortgage to a buyer if you have an assumable mortgage. Assumable mortgages are those backed by government entities such as the VA, USDA, or FHA. Instead of paying off the mortgage after selling the home, the buyer can take over the existing loan under the same terms you held.
Properties with assumable loans may be more attractive because the buyer will also assume the (often lower) interest rates.
Contact Chattanooga Property Solutions To Sell Your Home Fast
Now you know the answer to “What happens to your mortgage when you sell your house?” Do you want to sell your home quickly and be free from your mortgage? Are you selling a house with a deed of trust?
Call Chattanooga Property Solutions at (423) 454-3070 to schedule a consultation.