Selling Your House Before Paying Off a Mortgage

Selling Your House Before Paying Off a Mortgage

Mortgage loan terms can last a long time, often as long as 30 years. Lots of people can’t stay that long and had to move out due to circumstances of their own lives. By sell house fast, they think they can ditch the mortgage debt. However, before putting your house on sale, make sure you had prepared a few things first.

Before Selling a House

If you decided to sell your house, it is best to ask your mortgage lender for your current amount of the mortgage payoff. This can be valid for about 10 to 30 days before the amount increases due to interests. Knowing this helps you decide the selling price of your house. You also need to use the amount paid when the purchase is made to pay off the remaining balance of your mortgage loan.

Reviewing clauses of your mortgage loan document is important, especially the due-on-sale clauses. This protects lenders by having homeowners pay all their mortgage loans after the house is sold or the deeds transferred to the buyer. However, the lender must have a limited role in the selling process as long as the mortgage loan is assured to be properly settled.

The Sale

With the coordination of an agent, you will need to ensure the title of the property. When the sale is dealt with and done, the title of the house can only be transferred to the buyer. However, the remaining amount of the mortgage loan must also be settled. The remaining acquired money can still be enough for future purposes since you already factor that on your pricing.

Possible Setbacks

Things can run smoothly depending on luck. There will always be setbacks and issues that come along the way, sometimes unexpectedly. One of the examples is that the lender may unexpectedly charge you a fee along the selling process mainly due to prepaying the mortgage or some other penalty. Therefore, it is best to settle that matter before resuming the sale.

Another issue is that your remaining amount of the mortgage loan might be larger compared to the actual value of the house. Such pricing is definitely impossible to formulate and, therefore, will leave you with no other choice than to sell your house. You might be considering canceling the sale and continuing to live there while paying the debt, or you can postpone your plans when the debt amount is substantially lower enough to proceed with the selling process.

Conclusion

Selling a house doesn’t entirely eliminate your mortgage loan. It just presents an opportunity to pay it all off while still having remaining funds to move on. Certain preparations must be carefully made like being updated with your mortgage payments, doing comparative analysis for pricing the house to be sold, and other legal stuff in order to make a sound decision whether or not to sell the house. You better avoid looking for trouble involving money and the law by choosing the logical and correct option possible.

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