There are many reasons why you may want or need to sell your home while you still have a mortgage. In fact, most homes sold in the US still have a remaining mortgage balance. Maybe you need to relocate for work or family. Maybe you’ve had a major life change like marriage, divorce, or illness. Maybe you’re struggling to make your current mortgage payments. Whatever the reason, selling a house with a mortgage is totally possible.
At Columbia Redevelopment, we buy Portland homes in any condition from all types of sellers for cash. Most of the homeowners we buy from have an existing mortgage. In many cases, selling your house to a local redevelopment company like Columbia Redevelopment allows you to sell more quickly and without the usual headaches.
Keep reading to learn all you need to know about selling a house with a mortgage. Need personalized advice? Call us at (503) 200-8730.
Can you sell a house with a mortgage?
Absolutely! Selling a home with an existing mortgage is extremely common. According to recent studies, the average homeowner only lives in their house for an average of 14 years. That’s far shorter than the standard 30-year mortgage term.
Having an existing mortgage on your home shouldn’t stop you from making the right decision for you and your family.
What happens to your mortgage when you sell?
When you sell your home, you can use the proceeds of the sale to pay off your existing mortgage. To do this, you need to know:
- Your remaining mortgage balance
- Your payoff amount
Your payoff amount is how much you actually need to pay in order to satisfy the specific terms of your mortgage loan. It’s different from your current balance. Basically, you can’t simply write a check for the remaining loan balance, because you’re responsible for paying interest up until a specific date – generally the day you move.
If you have any liens on your house, such as those related to back taxes or renovations performed by contractors, you may need to use the proceeds from your home sale to pay those off as well.
Can you sell a home with negative equity?
If you have negative equity, it means that the outstanding balance on your mortgage is larger than the value of the home. While you can still sell your home with negative equity, you will be responsible for the remaining balance. For example, if you still have $400,000 remaining on your mortgage but you only sell your home for $325,000, you’ll still have to pay off the additional $75,000.
While it’s ideal to wait until the value of your home increases to sell, this isn’t always possible, especially in an economic downturn.
How to sell a house with a mortgage
Find your remaining mortgage balance and payoff amount
It’s important to have a clear picture of your current situation before you begin the selling process. Start by identifying the current outstanding balance on your mortgage. — call or email your lender to request this information.
Determine the appropriate sales price for your home
If you’re moving for career or family reasons or because of financial issues like foreclosure or the need to avoid bankruptcy, you may need to move quickly. Otherwise, it’s generally worth trying to list your house during a seller’s market. With your unique timeline, goals, and needs in mind, it’s important to price your home accurately.
Keep in mind that, in a traditional real estate transaction, whatever price your buyer agrees to pay is generally subject to contingencies, inspections, and appraisals. With Columbia Redevelopment, you don’t have to worry about these issues. With us, you can sell your home for cash as it is.
Prepare your home for sale
In a traditional transaction, you’ll want to make sure that your home is as appealing to potential buyers as possible. But it’s important to make sure you get the best deal possible through a process that works for you.
While renovating and staging your house with the help of a realtor may get you the best sales price, selling to a cash buyer without all the extra work will save you time and money, and often yields a better total return on your investment.
Pay any necessary closing costs
Although buyers are generally responsible for paying most closing costs, some transactions involve sellers paying for real estate commissions, escrow amounts, HOA dues, and other expenses. This amount will need to be covered before you can pay off your remaining mortgage.
Sell your home and pay off your remaining mortgage balance
Hopefully, the proceeds from your home sale will cover your remaining balance, and you can quickly pay off the rest of your mortgage. When you contact your lender to receive your payoff quote, they should provide you with an expiration date. This will tell you exactly when you need to make your final payment.
Keep any remaining proceeds
Once your house is sold and you’ve paid off the mortgage and any outstanding liens on your property, the remaining proceeds are yours to keep. You can use this money to pay off any debts you have, put a down payment on your next home, put it in the bank, or use it for any other purposes. Just be aware that, depending on how long you’ve lived in the house you’re selling, you may be responsible for paying capital gains tax on a portion of these proceeds.
Sell your home without the hassle!
Let’s face it — selling a home can be stressful and frustrating, especially with an existing mortgage to worry about. At Columbia Redevelopment, we buy homes from all types of sellers regardless of their situation or the condition of the home.