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Selling a House With a Mortgage: The Basics Explained

Selling a House With a Mortgage: The Basics Explained

Are you wondering how to sell a home with a mortgage?

Most homeowners sell their houses before they have their mortgages paid off. This is because most people only stay in their houses for about 14 years. The average financing agreement lasts for 30 years. 

Selling a house with a mortgage requires you to take some different factors into consideration. Below, we'll get into how to sell a home when you haven't done all your mortgage payments yet. Keep reading to learn more and maybe even turn a profit!

How Selling a House with a Mortgage Should Go

In an ideal situation, you would sell your home and use the equity you gained to pay off the remainder of the mortgage loan. 

So, before selling a house with a mortgage, call your lender. Ask them for your payoff amount. This will include all the payments you've made on your loan to date. It will give you an accurate idea of how much you still owe.

It's better to contact the lender than rely on your loan statements. Those may not be as up-to-date.

Then, figure out how much you're likely to get from selling your home. If you'd make enough money to have some leftover after paying off the mortgage, it's fine to sell.

You should also make sure you have enough to pay any additional loans you may have on the house.

Understanding Equity

Equity is an essential part of paying off your mortgage when you sell. If you're a homeowner, understanding equity is crucial because it determines how much you can get for your home.

In short, equity encompasses the amount your home is worth. It includes the amount you paid as a downpayment and your mortgage principal payments. Renovations to the home can also get counted as equity. When the property value in your area increases, so does your equity.

That's why it's best to wait until the market goes up to sell your home.

A Short Sale

Sometimes, people need to sell their homes, but the value has depreciated.  In these cases, they may owe the bank more than they're able to recuperate by selling the home.

When this happens, you need to ask the bank to allow you to do a short sale. You will then sell the house to a third party, and the money will go to the lender. Banks can either choose to forgive the remaining balance or go after you through legal routes. In some states, lenders are required to forgive owed money when a short sale occurs.

A short sale might inhibit your ability to get a mortgage in the future. You should only use the short sale option as a last resort.

Ready to Sell Your House?

Selling a house with a mortgage doesn't have to take a long time.

In fact, we buy houses in cash, helping you pay off your mortgage even faster. No matter what condition your home is in, we'll take it off your hands. We won't even require you to fix it up!

If you're ready to sell your house in the Phoenix area, contact us today!