Selling your home can feel overwhelming, especially when you still have an existing mortgage balance. If you're moving to a new city, upgrading to a larger home, or just ready for a change, you don’t need to wait until your mortgage is paid off. It's entirely possible to sell a house with a mortgage, and here's how!
How to Sell Your House With Mortgage
If you’re asking, “How can I sell a house with a mortgage?”—don’t worry. Many homeowners sell their homes before fully paying off their mortgage. The process is straightforward, but there are important steps you need to follow to ensure everything goes smoothly.
When selling a house with an outstanding mortgage, the key steps are understanding your remaining balance, working with your mortgage lender, and ensuring the fair listing price covers all related costs, including closing costs.
Step 1: Contact Your Mortgage Lender
The first thing you should do when deciding to sell your home is to contact your lender. They’ll provide you with the remaining funds, which is crucial to determining how much money still owed that you’ll need to cover from the sale. Your lender may also outline any fees or penalties related to paying off your mortgage early, so it’s important to understand the full financial situation.
Your lender will give you a “payoff amount,” which is the exact amount you need to pay the existing loan. This figure is different from your balance, as it may include additional interest or fees.
Step 2: Determine Your Remaining Mortgage Loan Balance
Once you’ve connected with your lender, you’ll have a clear idea of your remaining balance. Knowing this number helps you set a fair listing price for your home. The sale price must cover the outstanding balance, your closing costs, and any additional fees involved in the home sale.
If your home has gained value since you purchased it, you may have enough equity to cover these costs and even make a profit. On the other hand, if you're in a situation with negative equity (also called being “underwater”), where your balance is higher than the current value of your home, you’ll need to explore other options.
Step 3: Understand Your Mortgage Balance and Equity
When selling your home, it's important to understand your mortgage balance and how it impacts your home equity. Home equity is the difference between the current value of your home and the remaining loan balance. The higher your home equity, the more money you’ll likely pocket from the sale.
If your home’s value has increased over the years, you may have built up a substantial amount of equity, making it easier to sell the house, pay off the existing mortgage, and still have funds left over. In some cases, you might even consider home equity loans to access some of that value before selling. However, it's crucial to ensure that your monthly payments on any such loans remain manageable during the selling process.
On the other hand, if your home’s value has decreased and you owe more than the home is worth, you may be dealing with an underwater mortgage, which requires additional steps.
What Happens If You Have Negative Equity?
If you find yourself in this situation—where your remaining balance is greater than the home's selling price—you still have options. One approach is to negotiate with your lender to see if they’ll allow a short sale, where the home is sold for less than the outstanding mortgage balance, and the lender agrees to forgive the difference.
Another option is to bring cash to the closing table to cover the shortfall, although this is less common. In any case, your mortgage company plays a crucial role in these situations, and working closely with them ensures you can explore all possible solutions.
Managing Closing Costs and Fees
When selling a house with a mortgage, there are closing costs you’ll need to account for. These include taxes, and various fees associated with the sale. It’s essential to factor these into your final purchase price to make sure all expenses are covered.
Typically, it ranges from 2% to 5% of the home’s selling price. By understanding the total costs involved, including your outstanding balance and any penalties or fees, you can accurately calculate how much money you’ll walk away with after the mortgage payments.
Step 4: Skip the Real Estate Agent and Work Directly with AZ Home Buyer
Instead of going through the hassle of hiring a real estate agent, working directly with us at AZ Home Buyer can simplify the process, especially if you have an existing mortgage. We understand how important it is to price your home correctly based on the local market, which helps you sell quickly and pay off your remaining loan balance.
Unlike an agent who may take weeks negotiating with potential buyers, we provide a fast cash offer and handle the entire transaction, ensuring the selling price meets your mortgage lender’s requirements. We also manage all the paperwork, closing costs, and details, making the process hassle-free so you can focus on your next steps without worrying about complex negotiations or delays.
What If You Owe More Than Your Home Is Worth?
If you owe more on your home than it's worth, it might seem like you’re stuck, but there are ways to sell a house with negative equity. In this case, we recommend seeking guidance from a home-buying company who can help you evaluate your options.
Sometimes, a quick cash sale is the best option. At AZ Home Buyer, we specialize in buying homes from property owners who may be facing challenging situations, such as negative equity. We buy houses in any condition, and our process is designed to be quick, with no need for repairs or upgrades. By selling directly to us, you avoid the time-consuming selling process and the uncertainty that comes with it.
Ask For Help From AZ Home Buyer
Selling a house while still under mortgage doesn’t have to be a stressful experience. By working with a reliable cash buyer like us, you can avoid the hassle of listing your home, waiting for potential buyers, and dealing with extensive processes. We buy houses in any condition, and our process is quick and easy.
If you’re looking to sell your home in Phoenix, AZ, and want to avoid the traditional real estate process, give us a call at (480) 331-1819 to get started today. Let AZ Home Buyer take the stress out of selling your home!
