Can I Sell My House If I Have a Mortgage?

Sep 11, 2020 | Hometown Development

When you sell a house with a mortgage, the buyer’s funds should cover the rest of your loan, with a bit left over in profit for you. But, if your asking price is lower than what’s left on your mortgage, you may run into problems. Let’s take a look at what happens when you sell a house with a mortgage.

Selling a House With a Mortgage

Many homeowners sell their homes with a mortgage. It’s pretty common that homes are sold before the mortgage is completely paid off. The sale of the home should pay off the remainder of the mortgage and hopefully leave you with enough profit left over to make a down payment on your next home. As long as the real estate market has stayed fairly stable since you’ve purchased your home, and you’ve kept the property in good condition, it’s likely you’ll be able to sell the home, pay off the mortgage, and move on to a new home and a new mortgage without issue. If the mortgage is not paid in full by the sale of the home, the situation becomes more complex.

Will the Sale Price Cover the Mortgage?

To calculate how much money you’ll need to earn when you sell a house with a mortgage, start by asking your lender for the payoff amount. The payoff amount is the total sum you’ll need to fulfill the loan contract. Just using the remaining balance in your estimate won’t factor in the loan interest and other associated costs. Next, estimate your home’s value to get an idea of the price you could earn from selling. To do this, you might research similar homes for sale in your area, calculate the average price per square foot, and factor in the size of your lot and if you’ve recently completed any major upgrades to the home. If you want to skip a formal assessment, there are calculating tools online that can help you get an idea of your home’s value. The estimated sale price should be able to cover the payoff amount, any other fees for property taxes, realtor fees, and leave some money left over for you to move to a new home. If it comes up short, this could mean you owe more on your mortgage than your home is worth. When this happens, your home purchase loan is considered to be “underwater.” If you want to sell a house with a mortgage that’s underwater, a traditional sale may not be right for you. However, you still have options to sell your home.

Can I Sell a House with an Underwater Mortgage?

If the principal on your home loan is greater than your home’s value, you may find yourself trying to sell a house with an underwater mortgage. There are a number of factors that can affect your home’s value and make selling a house with a mortgage difficult. If your home needs significant repairs, or the home’s value dips due to other factors, the sale value might not match the value when you signed the mortgage. Fortunately, you can still sell a house with a mortgage that’s underwater. You can work with your lender to sell in a short sale, or sell to a real estate investor for a quick, cash offer.

Sell a House in a Short Sale

In a short sale, the lender agrees to accept less than the original loan terms. In some cases, they may be willing to waive the remainder of the loan. The short sale means the lender is more involved with the sale of the home. They must sign off on any offers before they can be accepted. The short sale process can be lengthy, and involves a lot of paperwork and waiting for bank approval. If you want to sell your home quickly, you might want to consider another option.

Sell a House With a Mortgage to a Real Estate Investor

When you sell your home to a real estate investor, they will make you an offer, in cash, based on the market value of your home. Real estate investors have worked with many homeowners who want to sell a house with a mortgage and can offer you a quick and effective solution for your mortgage problem. If you’re looking to sell your home quickly, they can close on the sale in as few as five days. Since they will purchase your home in its current condition, you won’t have to worry about making repairs or changes to your home. Also, you won’t need to hire a realtor. A real estate investor can work with you to resolve your debt and help you out of your home and on with your life. If you’re selling your home, but aren’t sure you can recoup enough to cover your mortgage, talk to the team at Hometown Development. We regularly work with homeowners just like you, and we can find a solution that’s right for your situation.