You cannot wait for years to save a considerable amount to buy a house. So most buyers opt for a home loan. But what if, later on, you want to sell your house with an existing mortgage? More importantly, what are the steps to sell a house with a mortgage?
Can you sell a house with a mortgage?
You can sell your house with an existing mortgage. For that, you need to pay the remaining loan balance and prepayment charges, if applicable. Once you do this, you’ll get the ownership of the house. You can simply pay this amount from the sale proceeds of your house. The quicker you get the payment for your house, the faster you can get rid of the mortgage and the interest thereon.
What are the steps to sell a house with a mortgage?
1. NOC and payoff quote from the lender
When you decide to sell your house with a mortgage, you must inform your lender (bank or mortgage company) of your intention to sell. Get an NOC from the mortgage company on the selling agreement. The lender will provide you with the payoff quote. This is the remaining amount on the mortgage plus closing costs.
2. Documents required to sell a house with mortgage
Make sure you have the below documents ready:
- Documents received during home loan sanctioning
- Encumbrance certificate (has ownership, legal and monetary liability details)
- Property tax receipts
- Sale deed of the property (obtained from the mortgage company)
3. Determine a fair listing price
You need to decide a fair listing price for your house. You can find the price for which similar properties in your area were sold for and determine yours accordingly. A fair price will attract the right buyers, and you’ll sell your property quickly.
4. Showing your house to prospective buyers
From here, you have two options:
1. Hire a realtor
If you hire a real estate agent, they will tell you to make your house visually appealing. You will have to undertake deep cleaning, renovation and fixer uppers. These costs are a hit to your pocket. It doesn’t end here.
You will need to
– show your house to every prospect
– clean your house before every visit
– be okay with no-shows
– answer the same question for the 24th time
– negotiate, without any guarantee of sale
This process can be physically and emotionally draining. Not to forget, you are paying the realtor commission and still working on their terms.
2. Sell your house to Friendly Home Buyers
Friendly Home Buyers visit your house only once. You don’t need to make your house pretty for them or bear the cost of renovations and fixes. They will buy your house AS IT IS. Breathe a sigh of relief on saving your money, time, and energy (phew). You don’t need to pay commission or appraisal fee.
5. Sell your house and pay off mortgage
Use the proceeds from the sale to pay off the mortgage. Once done, the mortgage company will hand over the ownership documents to you, which you will then transfer to the buyer.
6. Decide what to do with the profits
You’ve sold your house and paid off the mortgage, the remaining is your profit! You can use this as a down payment for your new house or invest it.
In today’s fast moving world, people don’t spend their entire lives in a house until their mortgage is paid off. Using these steps, you can sell off your house with a mortgage and invest in a new home.