In the U.S., a mortgage is a common way of buying a house. Most Americans find it impossible to buy a house with cash when purchasing their first house; it might take them years of savings. This is why all mortgage industry statistics show that, for young people, mortgages are one of the most reasonable ways to purchase a house.
Many believe they must pay off their mortgages before selling their houses. Therefore, the question arises, can you sell your house with a mortgage? The answer is yes!
Only when the buyer is ready to take on the loan is it possible to sell a house with a mortgage; most people purchase houses that already have mortgages. This is how one can sell a house relatively fast and for a fair price.
However, there are certain things you need to be careful about; to sell your house with a mortgage, you will first need permission from the lender. Moreover, you should only put your house on the market with a real estate agent specializing in selling houses with mortgages; they can guide you throughout and make things significantly easier.
What is a Mortgage?
A mortgage is a loan that you take to finance a house purchase. Taking out a mortgage means agreeing to repay the loan over a certain period; it usually takes 15 to 30 years to repay the mortgage loan because one needs to make recuring payments on the monthly interest and principle payments to pay off the loan.
When you sell your house with a mortgage, you have this brilliant choice of paying off your mortgage balance with the proceeds from the sale; this is called a payoff. If you have the money available and want to be debt-free, paying off your mortgage is a great idea. Doing so will also save you from interest payments over the life of the loan; thus, saving you extra cash after you pay off all the debts.
Things To Do Before Selling a House With a Mortgage
If you’ve decided to sell a house with a mortgage, you should know the following points:
Check your home value.
It’s essential to stay up-to-date on your house’s value, especially if you’re considering selling. Checking your home’s value is easy with online tools like Zillow’s Home Value Estimator. Once you enter your address and basic information about your house, you’ll get an estimate of your home’s current value. You can also compare the value of your house to other homes in the same neighborhood.
Contact your mortgage lender.
Ask your mortgage lender about your current mortgage payoff amount; some lenders require the entire principal and interest balance, while others may require only a smaller amount based on a thirty- or sixty-day note.
In other cases, if you have already paid your mortgage, the current terms of your mortgage note may allow you to sell your property “free and clear.”
If you can make a deal to pay the interest balance, and only the balance of the interest due, you can often negotiate a sale with your mortgage lender for a substantial discount. Once you have confirmed the interest balance and understand the specifics of your mortgage note, you can list the property for sale.
It is essential to communicate the status of your mortgage to your purchaser before making a sale agreement. Also, knowing the position of the loan allows you to set a price for selling your house; you may need to set a price where you can pay your loan and still be in a favorable position.
Estimate the net proceeds.
When you’re selling your house, you’ll need to know how to estimate your net proceeds; this will aid in determining the money you’ll have after the sale.
To calculate your net proceeds, you’ll need to know the outstanding balance on your mortgage, the real estate commission, and any other closing costs. You can then subtract these costs from the sale price of your house to determine your net proceeds.
Contact a professional real estate agent.
The market is ever-changing, so it’s imperative to have a great real estate agent by your side who is knowledgeable about the market trends, conditions, and the neighborhoods you’re considering.
It’s essential to contact a real estate agent and explain your situation. They will work with you to:
- list your house at the right time
- navigate the process
- find a buyer
- negotiate on your behalf for a fair and deserving price for your property
- ensure that everything goes as planned
Is it better to wait until I am mortgage-free to sell?
Some people wait and pay their mortgage off, while others sell beforehand; being mortgage-free allows them to enjoy the proceeds from the sale in a way they like.
Still, the decision to sell a house always depends on many factors; for example, if you want to market sooner, you may not wait. On the other hand, for those who face financial difficulties, or need to relocate due to a new job, health concerns, family crisis, etc., staying in the house longer is impossible. Ultimately, the final decision to sell your house depends on your situation.
If you’re in an excellent financial position and don’t plan on moving anytime soon, it may be better to wait until you are mortgage-free to sell. Yet, if you fulfill all the necessary requirements, there are no restrictions; you can sell your house with or without a mortgage.
What if you have negative equity?
If you’re in negative equity, you owe more on your mortgage than your house is currently worth. This can happen if you bought your house at the market’s peak and prices have since declined. This can also occur if you take out a second mortgage, or home equity loan, and use the money to improve your house.
It’s s not necessarily bad if your house is in negative equity. Yes, it may cause an inconvenience, as things may not go as smoothly as they might in the case of positive equity, but you will have a more challenging time buying a house in the future.
Why is positive equity better?
When the market value of your house is higher than the mortgage balance, this is called positive equity. Positive equity is good because it means your house is worth more than what you owe, giving you options in the future; for example, being able to sell your house for a profit, allowing you to pay off debt and other obligations, and/or taking out a home equity loan.
When should I notify my mortgage lender that I am selling my house?
Mortgage lenders have a vested interest in your property, so they must know about the sale. If you’re selling your house, you should inform your mortgage lender; doing this as soon as you sign a purchase agreement will be in your best interest. And, if you don’t tell your lender, you could face penalties, such as a higher interest rate on your loan. So, please notify your mortgage lender to let things go as smoothly as possible.
When can I sell my house after purchasing it?
Many want to know how soon they can sell their house after purchasing it. To determine your timeline, you must check your mortgage agreement for any restrictions on selling your house. If there are no limitations, you can sell your house anytime. However, some people will choose to wait longer to allow their equity to increase.
What happens to your current mortgage when you sell?
You may wonder what will happen to your mortgage when you sell the property. Each situation is unique because the mortgage type and the selling terms may influence the sale.
Most of the time, people pay their mortgage after the sale, yet there are situations where the mortgage may need to be assessed by the new owner or refinanced.
Conclusion
Selling your house with a mortgage can be a bit more complicated than selling a house outright. You can get a fair price for your house if you follow some simple tips:
Ask them for a reasonable price and give them space for negotiations. This allows them to consider your offer seriously and think of a purchase.
Try to make renovations before listing your house. This makes your house more exciting and appealing to potential buyers.
Work with agents who have experience in selling houses with mortgages.
So, if you have decided that you want to sell your house fast, working with us can help! Contact our well-versed experts at Selling.House, who are happy to provide you with a free estimate of your home’s value and a cash offer within 24 hours!
Reach out to us today for a quick and simplified selling process!
