How to Sell a Home with a Mortgage

How to Sell a Home with a Mortgage

Featured image by Dillon Kydd on Unsplash

Most individuals don’t have enough money in their savings account to buy a property without some form of financing, so a home loan is fairly popular. Can you sell a home with a mortgage? If so, how does the process work?

When you sell your home, you can use the earnings to pay down your mortgage debt as well as any closing expenses. Selling a home while still paying off your mortgage is quite common. Here’s how you can do it.


1. Decide on a Price for the House

Determine a suitable asking price for your home with the assistance of your agent when you want to sell it . The price should represent market expectations and what a genuine buyer is likely to pay. If you overprice the house, it may sit on the market without any bids, forcing you to accept a lower price than required.

You may already have an idea of what your property is worth, but your agent will give you a comparative market analysis (CMA) that combines essential pieces of information, such as the sale price of other adjacent properties and local market trends, to provide a comprehensive assessment.

2. Examine Your Settlement Statement

Reviewing your settlement summary, which is an exhaustive outline of fees and credits detailing the economics of the whole transaction, is one of the final steps in selling a house.

Here you will be able to see:

  • Your precise mortgage repayment amount
  • The property’s selling price
  • Net earnings
  • Who is paid, including commissions paid to agents, taxes and recording costs given to local governments, and final charges paid to the lender
  • Additional closing charges deducted from the price

You will not be directly responsible for ensuring that your loan is paid when you sell your home. When the purchaser of your house completes the transaction, the escrow company receives all of the funds and writes a check straight to your lender.

3. Accept an Offer and Set up an Escrow

After you accept your buyer’s offer, you’ll complete any remaining processes to close, such as the home inspection and appraisal. You may be wondering if you should contact your mortgage lender to notify them of your intentions to sell your home and complete your outstanding mortgage. You can, however, be confident that your third-party escrow business will enable those communications.

When you accept an offer on your house, you don’t have to mention anything to the bank. You just keep making payments, and as the closing date approaches, the escrow or title business managing your transaction will contact your lender to obtain an official payback report based on the actual closing date. You don’t need to do much maintenance, in other words.

4. Contact Your Lender

The next step in selling your home is to determine how much you currently owe on your mortgage. Your lender must deliver the complete cash needed to repay the mortgage obligation as of a certain date. Calling the bank and requesting a payment statement is always a smart starting step. It will assist you in estimating how much equity you will earn if you sell it for a specific price.

The payback figure includes any interest owed until the day you want to pay off your loan completely. When you close on your property, your escrow firm will work with your lender to receive an updated payment amount and utilize the proceeds from the sale to repay the loans in full.


5. Choose the Best Time to Sell to Sell Your Home

Consider the following factors when selecting the best time to sell:

  • Will you be able to find another house? If you’re looking for a new home, you may discover that it’s more difficult than in the past in many areas. The same variables that make it an excellent time to sell might also make it tough to buy.
  • Is it a buyers’ or sellers’ market? There is a significant difference between a buyer’s and a seller’s market. If there is a lot of competition in your region and fewer properties listed for buyers, you may set your property price higher than when it was the other way around. A comparative market study performed by your real estate agent is beneficial.
  • Why are you relocating? If you must relocate for work, you may want to move sooner than if you are downsizing or want to take advantage of a hot housing market.

If you need to sell your house in Milwaukee, Cream City Homebuyers is a reputable local home purchasing firm in Milwaukee that can buy your property and assist you in selling it quickly. They buy properties in Milwaukee in any condition without any agent fees. Feel free to reach out to them.

6. Prepare and Stage Your Home to Sell

When selling a home, you want to present your property in the best possible light. Here are a few steps you can take:

  • Make minor improvements. Replace door and cabinet knobs. Apply a new layer of neutral paint on the walls. In the garden bed, plant some flowers. While granite countertops are lovely, not everyone has the funds to replace the main bathroom before selling their house, but there are many other things you can do to liven up your property.
  • Deep clean and declutter your home. Deep cleaning is always beneficial, especially in today’s health-conscious environment, even if you have the possibility of numerous people passing through your property. You should also declutter. This will make walking around your home simpler for potential buyers, appraisers, and home inspectors.

7. Cover the Closing Costs

While closing fees are commonly assumed to be paid by the buyer when someone is selling a home, some charges are generally covered by sellers. Here are a few examples of potential costs:

  • Ownership policy: This coverage protects the buyer in the event that someone later comes along with a legal claim to your property. As a sign of good faith, the seller will often pay for this
  • Commission for real estate agents: This is normally 6% of the ultimate purchase of the property, split between the buyer’s agency and your listing agent
  • Dues for the homeowners’ association: These receivables will also be prorated if you stay in a homeowners association neighborhood
  • Prorated taxes: You’ll incur real estate taxes for the amount of the month you lived in the house before selling it


Some Final Notes About Selling a Home with a Mortgage

Mortgages are great financial tools that enable people who don’t have cash reserves to realize their goal of homeownership. Some homeowners may stay in their houses long enough to pay off their whole mortgage when they sell. However, you are not forced to remain in your house until that occurs.

Sellers typically use the cash to pay off their outstanding mortgage balance and closing fees, then pocket the remainder. This approach is viable since real estate often increases in value over time, so a house will usually be sold for more than when you bought it.