Can You Sell a Home with a Mortgage?

Nowadays, people don’t usually stay in their homes until their mortgage is fully paid off. Furthermore, if you need to sell your home quickly, you may wonder if you can sell your home even when it’s not paid off yet. We will answer this question in today’s blog post, so stick around.

Process of a Typical Sale

Typically, a traditional-style selling process includes listing your home for more than what you currently owe on your mortgage. If you’ve been paying down your mortgage over time, you should have enough equity in your home (unless you refinanced), that you can cash in on after closing on your home. Once a home goes into closing, between the down payment and the mortgage loan, the buyer brings funds to a settlement that equals your home’s sale price.

 These funds usually pay off:

  • The remaining amount of your mortgage
  • Home equity loans or HELOCs (home equity line of credit) you may have
  • Any closing costs, including taxes, agent commissions, etc.

If any money is left over after paying off those debts, you will get the remainder as a profit. You can use those funds to finance a down payment on a new home or for whatever else you want.

Short Sale

In a short sale, the home is sold for less than the total amount of debt against the property. As the owner, you need to speak to your mortgage lender and ask them to accept a loss since they will be getting less than they’re owed since the proceeds from the sale is less.

The process in a short sale is different. Rather than you having the final say on whether or not to accept an offer, you would need approval from your lender before proceeding with the sale. This can significantly delay the process.

Synonymously Buying and Selling a Home

If you sell a house first before buying a new one, you’ll receive the payout from your old home, which allows you to make the down payment on your new home. If you buy a house first, note that you’ll need to work harder when arranging the details of both transactions. So, realize you won’t have funds easily available from the sale of your home to cover your down payment and closing costs for your new home. In this case, you will have to rely on these following options:

  • A bridge loan – This is a short-term loan that can be used to pay off a remaining mortgage and for a down payment. When you sell your old home, you can then use the funds from your sale to pay off the bridge loan. 
  • Carry two mortgages – While this isn’t the best idea, if you can afford it, it’s an option to consider. It allows you to find a buyer for your old home while being able to make offers on a new home or close on one without the obligation of a home sale uncertainty.
  • Use a home sale contingency – When writing up an offer on a new home, your options may include a home sale contingency (stated in your contract that you need to find a buyer for your old home before you can close on a new one). If you can’t find a buyer, this clause gives you an out. But, be aware that while using this option, it can reduce the likelihood of buyers with offers.


Need to Sell With a Mortgage? Contact Us

Now that you know you can sell your home with a mortgage, how about selling to us? We buy houses in the Southern NH area and promise no fees or commissions, no pressure to sell, and cash-in-hand within days. Sound good? Call us today and let’s see if we can make a deal!

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