If you’re a homeowner with the pesky weight of paying a mortgage on your shoulders, you might wonder; Can you sell a house under mortgage? The answer and good news are, yes, you can sell a house with a mortgage, but the procedure can be tricky and hectic.
However, you don’t need to worry, as we’ve documented every relevant information, you’ll need regarding selling a home before paying off the mortgage. Before diving into the topic, let’s take a quick look at what mortgage sales mean to help you understand better.
A mortgage sale means selling your home even when you owe money on the mortgage. It may sound shady if you’re new to this field, but it’s a common phenomenon, especially in Florida. Most people here, who sell their homes, have outstanding mortgages.
A mortgage may seem scary to the buyer of your house. Still, if you assure them and arrange all the legal documents correctly, you’ve nothing to worry about. So, don’t worry if you’re planning on selling a home that is not paid off because the pending mortgage payments won’t stop you from moving into your brand-new home!
How Does a Mortgage Sale Work?
You might be wondering how selling a house works if you still owe. A mortgage sale involves convincing the buyer party that the mortgage will be paid off once the home is sold. Once the seller grabs the total amount, they must pay off the mortgage and keep the remaining amount as profits.
In this situation, the house must be sold above the mortgage price and closing deal costs combined. Home equity is the name of the game. Home equity means the price of your home after paying off the mortgage balance and closing deal costs. Home equity is directly related to your profits.
An important thing to remember before selling a house with a mortgage still on it is to ensure that your home’s total value should always exceed the remaining mortgage debt. If that’s not the case, you can wait for sudden real estate market shifts, look for better agents, or refurnish your home to boost its price.
How to Sell a House Before Mortgage Paid Off?
Generally, you must pay off your mortgage before selling the house. You can proceed with the paperwork and list your homes for sale, even under mortgage loans. But the mortgage balance must be paid before closing the deal. Here are simple steps to sell a house before the mortgage is paid.
1. Contact Your Lender
The first step is to contact your lender regarding the pending mortgage amount. If you’re involved with the bank, you can fill out a “Discharge of Mortgage” (DOM) form, which can be found on the bank’s website. Your lender will inform you how much you need to pay when you sell the property. It will have all the interest rates and late payment fines included in it.
One important thing to note is that the latest amount will only stay valid for 30 days. Mortgage payments keep changing regularly, so the final amount will be slightly higher than the disclosed amount.
2. Start Estimation
Once you know how much mortgage you’ll be paying off, you can start a rough estimation of your beloved home. There are several methods for doing so. You can start by looking online at similar houses in your area.
You can also use Automated Valuation Model (AVM) tools available on the internet for raw estimation of your beloved property. A rough analysis is necessary because it depicts if you’ll need to renovate the house to boost its price.
3. Find a Good and Active Agent
After the price estimation of your house, you need to find and contact an active agent who can set a fair listing price. An active agent is necessary as many scammers in the market are looking to make a quick buck and do not work regularly. Your real estate agent will be the most active entity in the sale process.
A good realtor will also teach you about market trends and ensure that your house sells at the highest price. They also help you analyze the offers and help you get the best deal possible. So, even if you spend extra money on the realtor, you’ll benefit significantly from the bigger picture.
4. Sell the Home and Pay Off the Mortgage
Once your agent finds you a good deal and you get the buyer’s appraisal, you can start with the final procedure of payments. Your lender’s agent will be present to collect the due mortgage amount when the deal is closed. After subtracting the realtor fees and closing costs, the remaining price is your profit to take home.
Why Choose a 3-Step Home Buyer to Sell a House with Mortgage?
The 3-Step Home Buyer is a one-for-all solution for all your real estate problems. We make sure that you get the best deal possible. The 3-Step Home Buyer allows you to get your house sold in as little as seven days!
We always work to create win-win situations for our clients. We’ll help close the deal even when your house is under mortgage stress. So, what are you waiting for? Book a session with 3-Step Home Buyer, and let us handle all your real estate issues.