Selling a House With a Mortgage: Is It Doable?

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Your home is likely your largest financial investment and a place for you and your family to feel safe. However, if it’s time to move on, you may have questions about what happens if you want to sell your home with a mortgage. It is possible, and most people end up having a remaining mortgage on their homes when they decide to sell.

On average, Americans only stay in their homes for about 13 years. That means with the popular 30-year mortgage terms; most sellers will have an outstanding balance on their mortgage loans.

How does it work when you want to sell your home with a mortgage? The answer is slightly less complicated than you may think. Let’s take a closer look at the steps you will need to take when you want to sell your home with a mortgage.

Contact Your Lender

Before listing your home, you will need to consult with your mortgage lender. They will calculate your repayment quote, which is valid for up to 30 days. Your quote may be slightly different from the amount that you find on your statement due to interest calculations to the day and any applicable fees. 

It’s in your best interest to take a look at your mortgage contract and find out if any prepayment penalties will have to be paid out of your sales profit. While these types of fees are not as common as they used to be, your contract may include a penalty fee.

Settlement Statement

Your settlement statement is an important factor in how you will make out on the sale of your home when you have a mortgage. It will give you the information that you need to make an informed decision about your sale. It may not be the right time to sell, or you may find it difficult to get the price for your home that you need to make a profit. 

Set a Price

Once you have a repayment quote from your lender, you will better understand what price bracket you will need to list your home. With the help and advice of your real estate broker, set a fair market price for your home. Ideally, you want to list an amount that will cover all your selling expenses. Your profits should be able to cover your loan amount, closing costs, commissions, land taxes and leave you with a fair down payment amount for your next home purchase.

Negative Equity Sale

In at least 10% of home sales, the owner owes more on their mortgage loan than their home is now worth. When this happens, the timing might not be right to sell. However, if you need to sell, it’s still possible to face a negative equity situation. You will be responsible for paying the difference in what you will owe on your mortgage after the sale of your home. 

While it’s not impossible to sell your home when you have a mortgage, it does make the process a bit more complicated. Trust your broker and your lending agent to guide you through the process and get your home on the market today. 

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