The chances of living in the same house your whole adult life gets slimmer with each generation. If you’re thinking of selling a house with a mortgage, you are not alone. People like you all over the world are Googling right now, “Need to sell my house.” With mortgages lasting a span of 30 years, so many factors can have you scrambling for a how to sell my house by owner manual. Well, look no further. There answer to “Can you sell a house with a mortgage?” is yes! Whether you need a change of scenery, or are looking to sell your house when behind on your mortgage, there is an out. So, how do you sell a house with a mortgage?
Read on as we share our, “Selling a House with a Mortgage Guide.” We’ll have you thinking, “I should of started selling my home months ago!” (And perhaps you should have!)
Get the Payoff Amount
How do you sell a house with a mortgage? By paying off the mortgage. The first step to selling a house with a mortgage is to find out your payoff amount. The payoff amount is the price you would owe if you were pay the loan in full that day.
This is a lower number than your current balance. Heck, your current balance isn’t even your current balance. That’s because your loan is riding the wave of the housing market.
Like the stock market, these values are ever-changing down (and up) to the nearest nano-percentage. Everyday that you have a loan, your payoff amount if accruing real-time interest.
Due to the fluctuation of the housing market, your payoff amount is always going up and down as well. Whenever you receive this quote it could be good anywhere from 10 to 30 days. Don’t be shocked when you finally go to payoff the loan and it’s increased a little.
However, if your loan is what’s considered a “closed-end” loan then the price you are quoted is secured by the fact that this home is your “principal dwelling.”
Due to this clause in closed-end loans, the payoff amount must be an accurate number when presented. This number will be the exact dollar amount required by a specified date in order to fulfill the obligations of the mortgage contract.
Seeing as you can legally only have one principal dwelling, these provision does not work in the instance of motor homes or recreational vehicles, vacation homes, or other secondary residences.
Look Out for Penalties
When you are entering a payoff agreement with a lender, you are going to pay interest all the way through the day your loan is paid.
On top of these last second taxes, the payoff amount will also have additional fees such as insurance or penalties that may be figured into your payoff amount.
Now, the plot thickens. Can you sell a house with a mortgage? You certainly can, but lender’s make this a bit difficult for you. There may be a prepayment penalty for paying off your loan early.
If you’re selling a house before mortgage is paid, it is not in the lender’s best interest because of that exact word…interest.
You finishing the loan early means the mortgage company can’t levy your account with fees over the next 30 years. So, to make up for that loss of income, they hit you with a prepayment penalty.
This is much like a phone company when a contract is broken. You have pay to get out. But if you’re just like, “I need to sell my house” and be done, then what’s another little fee?
We Get Properties Insights:
- Be prepared to go to war with your lender if your mortgage payments aren’t up to date.
- Before focusing on making a profit, think about being able to save your home if you are living paycheck to paycheck.
- Seeking legal advice can sometimes be a blessing when your lender is giving you a hard time when it comes to things like a short sale, or fix and flip. Learn the game from those we are paid to play it.
- If you have a second or even a third mortgage, make sure you have all parties involved on the same page. Timing is key when trying to unload your house, especially if you have a nervous buyer with a lot of other housing options.
Price the House
Your home payoff amount is an important aspect of selling a house with a mortgage because that’s the number used to set the value of your house.
If you are selling a house before mortgage is paid, you are probably not looking to lose money on the situation. You must be wondering, “Can you sell a house with a mortgage and still make a profit?” The answer is yes.
There is a fine line to dance across when you are looking to price your house. You want to price your property to cover the payoff amount.
Then think of the equity you already put in with all the years of mortgage payments. You’re going to want that money back.
Don’t forget any repairs you made or additions you put on. Lastly, take into consideration paying a realtor, closing costs, and appraisers. This adds up.
Get an Appraiser
How do you sell a house with a mortgage when you don’t even know what all of the aforementioned costs really are?
This is where an appraiser comes in handy. Selling a house with a mortgage is much easier to price when you have a third party’s opinion.
They can take into consideration what the neighborhood is going for, what your repairs are worth, and the demographic looking to buy in your neighborhood.
Taking an algorithm that is far from scientific (and completely objective…yet educated), the appraiser will present you with a fair market value of your house.
In an ideal world, all of the costs mentioned above will be covered by this assessment.
When you are getting an appraisal, let us reiterate that this is objective. As it would be to a different appraiser. That is why it is in your best practice to get up to three quotes.
This way you can sift through the different dollar amounts thrown your way and find a happy average. Just keep in mind that you need to pay each appraiser, so include their fees in your costs.
Where’s the Profit?
We know what you’re thinking, “I need sell my house but I would also like to make some money when I’m selling my home.” Okay take that number we just created from all those pay-outs…and add $5-$10,000.
You don’t want to overprice your house because you will turn off potential buyers just by the listing. However, you don’t want to under-price your house as well.
Obviously, this will hurt your bottom line, but a low price may also turn off potential buyers. They might think that a house with your description being priced so low must come with a defect of some sort.
That is why there is no concrete “How to Sell My House By Owner” for Dummy’s Manual. Nobody says, “Selling my home is easy,” because it’s not an exact science. You need to gamble with your price, and take your time.
How to Sell Your House When Your Behind on a Mortgage?
Don’t have time? It happens to the best of us. If you’re in a situation where you need to sell your house when behind on your mortgage, you are not alone.
However, if you are behind on your mortgage with no signs of improvement in the near future, then you need to list that thing…tomorrow.
The quicker you list your property, the quicker the ball gets rolling, the quicker your credit can be salvaged. If you are behind on your mortgage, you are still expected to pay your payoff amount, which would include any late fees or delinquencies on your account.
If putting your house on a listing isn’t fast enough, you still have a couple of options.
Transfer the Loan
This one is a shot in the dark because it has become increasingly rare. Some mortgages have a clause that would allow you to simply sign your loan over to a new buyer.
From there on, that person would take over your debt and get control of your property.
However, most mortgage contracts have a “Due-on-sale” clause. This is the requirement where borrowers have to pay their loan in full to the lender before selling the house to somebody else.
This is most instances, which is why all the information outlined prior to this suggestion is pertinent when you are selling a house with a mortgage.
While due-on-sale clauses are typical, it is still worth inquiring if that language is in your loan. If not, then a transfer would the ideal way to get the property off of your hands if you’re looking to sell your house with a mortgage quickly.
Try a Short Sale
If you’re like, “I need to sell my house now,” this is one way to go. With a short sale, you can’t expect a profit. The point of the short sale is because the debt you owe exceeds the net proceeds that would come from selling the property.
Your lender will offer to buy your property for under market value, but your mortgage agreement will still be upheld. This isn’t the best way how to sell my house by owner, but fast enough to get rid of it.
Selling a House With a Mortgage As-Is
Selling your house can be an overwhelming experience. With all of the costs adding up, it may not seem worth all the effort to either break even. Instead of dealing with the hassle, you can choose to sell your house as-is.
Companies like We Get Properties will buy your house. So, if you’re in a drought, the selling my home prayers have been answered.
With We Get Properties, our company will assess your property and offer you a fair price. Closings take up to only 30 days.
You don’t have to worry about any of the paperwork, dealing with a realtor, hiring multiple appraisers, negotiating over the price tag, or repairing any damage to the property. That’s why it is called selling your house “as-is.”