Homeowners often wonder about the options surrounding selling a home with an outstanding mortgage or other complications. Can you sell a house before paying it off? How can I sell my house fast in Memphis?
While these questions aren’t always straightforward, the short answer is yes. In fact, it is not only possible to sell a house when its debt isn’t completely paid off — it is common! Here’s more from Pyramid Properties, a top cash purchaser of real estate in the Memphis area.
Understanding Mortgage Payments’ Role in Equity
The first important point here is that you don’t have to pay off your mortgage debt or liens before you sell your property. However, typically, you will still have to repay those debts at closing.
Some loans involve assumable mortgages, but that is uncommon. Legally, most lenders can demand full satisfaction of the debt at closing. That means your home sale’s closing agent determines an accurate payoff of the amounts owed against the property and deducts these from the seller’s proceeds.
In some cases, mortgage loans carry a prepayment penalty. Usually, the closing agent will obtain that information beforehand, so you should feel free to ask about this payoff amount. After repaying outstanding mortgages, liens, outstanding property taxes, and any other fees, you receive the balance in cash — described as your equity in the property.
So, can you sell a house before paying it off? Yes, but it is important to sell the property for a price higher than the debt owed if you’re planning to collect home equity in cash at closing. If the sale price doesn’t cover your debt, your mortgage lender will simply absorb all the additional cash into the payoff, and you could still owe them money at that point.
How Closing Agents Handle Mortgages at Closing
Many homeowners find that speaking with their financial advisor can help them navigate the selling process. It’s also useful to chat with a trusted closing agent and obtain current and accurate written statements from the bank or finance company that holds your property’s mortgages or liens. This makes it easier to precisely calculate the amount owed.
With the active housing market, it’s critical that the closing agent times your payoffs with the actual closing date. Coordinating lenders and accurate payoffs could prevent foreclosure, as you’ll have fully repaid the loan when the property changes hands. The agent will also deduct property taxes up to your closing date.
Close Quickly for Cash With Pyramid Properties
Can you sell a house before paying it off? Yes, you can. Once you know how much a closing agent will deduct to repay your property’s current debts, you can take the next step – calculate how much cash you will receive from the sale!
Alan at Pyramid Properties offers hassle-free cash sales, regardless of a property’s condition. Don’t wait months and get stuck with repair expenses — call or text (901) 504-5555 for your fair cash offer! The company’s blog also covers details about the selling process, including how to sell a house with a deed of trust.