Selling your house with a mortgage is common. Most people don’t wait until their loan is paid off. If you’re thinking about making a move, you’re in good company. Here’s what you need to know.
Know Your Payoff Amount
Start with your lender. Ask for a payoff statement. This is not the same as your current balance. It includes interest and any fees up to a specific date. The number changes every month. If your closing date shifts, get an updated statement.
Figure Out Your Home’s Value
Next, estimate your home’s value. Use recent sales in your area. Online valuation tools can help, but they’re not perfect. For the most accurate number, consider a professional appraisal. Your agent can also run a comparative market analysis.
Calculate Your Equity
Subtract your payoff amount from your home’s value. That’s your equity. If the number is positive, you’ll walk away with cash after the sale. If it’s negative, you may need to bring money to closing.
List Your Home
Find a real estate agent who knows your market. They’ll help you set a price, market the property, and negotiate offers. You can sell by owner, but most people use an agent for smoother sailing.
Review Offers Carefully
When offers come in, check the numbers. Will the sale price cover your mortgage and closing costs? If yes, you’re in good shape. If not, you’ll need to negotiate or consider other options. Sometimes, buyers ask for concessions or repairs. Factor those in.
Handle the Closing Process
Once you accept an offer, the closing process begins. The buyer’s funds go to pay off your mortgage first. Any leftover money goes to you, minus agent commissions, taxes, and other fees. If the sale price doesn’t cover everything, you’ll need to pay the difference or work with your lender.
What If You Owe More Than Your Home Is Worth?
If you’re “underwater,” you have a few options. You can bring cash to closing. Not ideal, but sometimes necessary. Another route is a short sale. Here, your lender agrees to accept less than what you owe. It’s not a quick process. You’ll need approval, and it can affect your credit. Some government programs may help if you’re struggling.
Don’t Forget About Prepayment Penalties
Some loans have prepayment penalties. Check your mortgage documents. If you pay off the loan early, you might owe a fee. It’s rare, but not unheard of. Better to know now than be surprised at closing.
Keep an Eye on Timing
Timing matters. Are you moving for a job? Downsizing? Chasing a hot market? Your reason shapes your timeline. If you’re buying another home, coordinate closings to avoid extra costs or headaches.
What Paperwork Do You Need?
You’ll need your mortgage statement, payoff letter, and closing disclosure. Your agent and title company will guide you. Keep everything handy. The smoother your paperwork, the smoother your sale.
Taxes and Other Costs
Selling isn’t free. Agent commissions, transfer taxes, and closing costs add up. You might also owe capital gains tax if your profit is high enough. Most homeowners are exempt, but check the rules. No one likes a tax surprise.
Light Humor Break
If you’re feeling overwhelmed, you’re not alone. Real estate is complicated. At least you don’t have to mow the lawn for much longer.
Final Thoughts
Selling a home with a mortgage isn’t rocket science. But it does take planning. Know your numbers. Work with pros. Ask questions. The more prepared you are, the smoother the process.
If you’re ready to sell, start with your lender and a trusted agent. Get your payoff, know your equity, and keep your eyes on the finish line. You’ll be handing over those keys before you know it.
