Many times this question had appeared to most of us and I hope this article can address this question.
A traditional mortgage might last for up to three decades. Very often, people want to sell their homes long before they have entirely paid off the balance of the home loan. Often prospective home sellers ask this, “Can I sell mortgage property to another buyer?”
Let’s take a moment to understand and answer this important question about home sales.
If you still have an outstanding loan on your mortgage and you want to sell, I suggest that you should first follow these two steps: Find out what you what is the outstanding loan or what you owe:
- These days, you can probably see the outstanding amount still due on your paper statement or simply logging into the bank website that you use to pay your mortgage to for each month. If you can’t find the answer this way, a simple phone call to your loan company should quickly answer the question.
- Calculate a reasonable sales price on the home: To figure out how much your house might sell for, you might look at similar listings in your surrounding or neighborhood. Or you can also contact a local real estate broker to ask for comparable recent sales in your vicinity to be precise.
If what you owe is considerably lesser than typical selling prices for homes like yours, you’re probably in good shape. When you close on the home sale price, the closing company will use the sales proceeds to pay off the loan and any other fees or prorated taxes owed. After that, they will cut you a check for the balance. It’s very common for people to sell their homes before they have completely paid off the mortgage, and real estate agents and closing companies know how to handle these transactions very well.
Can I Sell Mortgage Property If I Owe More Than I Can Sell For?
In some cases, you may have an urgent reason to sell your home, but you still owe a lot more on the mortgage than you are likely to get from a typical buyer. This can happen during downturns in the real estate market. You probably don’t want to cut a check just to sell your house. If you have a very urgent need to sell your home, you might have the option to work with your finance company to work out a kind of transaction that’s called short selling.
With short selling, the lender will agree to accept less than the loan balance to release you from your mortgage. Or a real estate agent may also help you by negotiating this kind of home sales with your lender. Short selling can help you get out of your mortgage quickly, and it will also look better on your credit than an outright foreclosure. Lenders may agree to short sales because this kind of transaction can save them time and legal fees as well.
Can I Sell Mortgage Property If I Have Prepayment Penalties in My Mortgage Contract?
Another problem that you may face is prepayment penalties for paying your mortgage off early. These penalties are generally only in the contract for the first few years of a mortgage, but they may be as high as eighty percent of the interest you would typically pay in the next six months.
Not all mortgages have prepayment penalties, and in many cases, they only apply to refinance issues and not to outright sales. If you do have these penalties in your lease, you may decide to wait to sell your home. However, if you need to sell your home urgently, you may just sacrifice these penalties from your final check.
Can You Sell Your Mortgaged Property and Let The Buyer Take Over The Loan?
Some mortgage companies will allow another buyer to resume the mortgage. The loan company will probably require the new buyer to meet certain criteria or qualifications, such as having good credit records and so on. Some other loan companies will flat out refuse to let any new buyer assume this mortgage and will ask them to start their own new loan application.
Unless allowing assumptions is already in the mortgage contract, lenders will probably balk if current interest rates are higher than the original interest rate on your current loan. If you can let a buyer assume your loan, at a lower interest rate, it may make your property attractive, even if you must sell for a higher price than the market generally asks for in your area for your type of house.
How to Get Help Selling A Mortgaged Property?
You can do some research on your own, or you can find out how much you need and get an idea of how much you could ask for your house. On the other hand, you will probably have more success by calling upon an experienced real estate agent to access and get you a good price. These professionals can help you understand your current mortgage and alternatives that you may have. The assistance of a real estate professional may be particularly important if you plan to sell when you owe more on your balance than you think you can sell your house for. Well, I hope I was able to answer some of your concerns here. Should you require more information please drop us a line and we will be more than pleased to help you out.
Here is a video on this subject for your viewing pleasure.
Have a great day.