The Ultimate Guide
Once a homeowner, the need to sell a house is inevitable, and you might have to make this decisions at least once in your life. Reasons for selling a house could be anything from a job relocation, a divorce or separation, to the death of a family member.
Well, you don’t want to sell at a loss by accepting less than what you paid for the house. This why you should try every possible way to get the best value from the sale of the house.
Sellers remain favourable, especially after paying off all their mortgages before selling. This is how they get enough equity to enjoy the purchase of the new home. Moreover, you can use the amount to pay off all the debts and other obligations with closing costs. Therefore, a seller often benefits from positive equity.
First, you must try to pay the mortgage as early as possible. Doing this will save you money on interest and could even allow you to sell your house for more than the amount you initially borrowed.
Though selling a house is daunting, a little effort from your side can make things go smoothly. Secondly, you need to get ready to move, i.e., you may pack your belongings, start staging the house, and work on repairs and maintenance to get the potential buyers interested in your property. Finally, you need to take care of business negotiations and closing dates.
But what if the seller has to sell immediately and cannot wait for the equity to build? Well, there are rare conditions that you may need to face as a seller. If, in any case, you have to sell your house before paying off the mortgage, then you must consider whether you can do so or not. Meanwhile, read on for other situations that must be considered.
In case you need to sell your house before paying the mortgage, keep the following in mind;
Let your lender know and determine whether they approve this, as some lenders want the total mortgage payment before selling a house.
Most importantly, you must know the amount of equity you have in the house. This portion of the sale price would pay off the remaining balance on your mortgage.
You must prove the amount of money you will earn from the sale. To assess your home’s current value, you must determine the current market conditions and the demand in the housing market.
Finally, once you are clear about things, this is the right time to sell your house before paying off your mortgage. This could be the easiest way to get out of a property that’s not working for you and free up some cash flow.
However, consulting with a qualified real estate professional is essential if you decide to go this route.
Steps to Take to Sell Your House Before Paying Off Your Mortgage
If someone struggles to keep up with their mortgage payments, they must act. There are numerous ways of coping with a failing mortgage; the earlier you take action, the better it will be for you.
You can devise a payment schedule, refinance your loan, or sell your home with your lender. So, the answer is evident – if you have a property with a failing mortgage, you need to make timely decisions and deal with the problem, head-on.
No matter what you do, try your best to not ignore or procrastinate the problem, as it will only worsen if you fail to fix it.
Know the amount you still owe.
You need to know how much you still owe on your mortgage; this must account for all the money you still owe; including the principal, interest, and any late fees or penalties that you may have accrued. When unsure where to start, you can get advice from a mortgage lender or real estate agent.
When you decide to sell your house before paying off the mortgage, you must contact the lender to figure out exactly how much money you still need to pay off before selling your home.
One of the crucial actions you must perform is charging a reasonable fee; be sure of the sales price that you must sell your house for, because you are usually required to provide proof to the mortgage company. According to them, the sale price should be 25% higher than the mortgages’ outstanding sum.
Get an appraisal and make repairs etc.
When you sell your home, the mortgage lender will likely want to know what the property’s value is. Typically, an appraisal becomes necessary. You must complete all the required repairs before deciding to list the house for sale.
Put your house on the market.
You must know a few factors if you are considering selling your house. It would help if you first spoke with a real estate agent to price your home appropriately and receive the best bargain.
Secondly, ensure you have all the necessary paperwork (title deed, tax returns, etc.), since potential buyers want to know about any liens or outstanding mortgages on your property.
Finally, be prepared for possible delays while the sale moves through the system; selling a property can take anywhere between six to nine months.
List your property on various real estate websites
Some homeowners think that listing a property on various real estate websites is better; they believe it allows you to sell fast. And, as more people reach your listed property, you increase the chances of getting more than a single offer. Additionally, it will enable you to be in a better negotiating position.
You don’t need to negotiate with only one buyer. Moreover, when you list your property on different websites, many people will get the opportunity to receive all the essential information related to your property. It is imperative to take every necessary step before selling a house.
Keep your home in a livable condition
Try to keep your home in a livable condition; check if there are any structural issues and try to renovate your home perfectly. Otherwise, such problems can hold back potential buyers.
Whether selling your home with/without a mortgage, you must continually develop the best marketing tactics if you want to sell fast. Potential buyers want to know everything about the house’s condition and how much it is worth.
By continuously developing the best marketing technique, you’ll be able to close the deal quickly. In short, nobody wants to face unexpected delays in selling a home, because delayed processes would only cost you time and money.
When would be the best time to sell a home before paying off the mortgage?
Generally, sellers try to sell after they have built up equity in their house. Unfortunately, they might decide to sell a house before paying off the mortgage when they are not in an ideal situation. Selling a house before paying off a mortgage could be the best decision when you cannot pay your monthly mortgage. You may be unable to pay the remaining mortgage payments, or you might have fallen behind on them, so it is better to sell the house and don’t wait for anything else.
Likewise, consider selling your house if your current income is insufficient to cover mortgage payments. However, situations tend to vary, and the ultimate decision will always be yours. As an individual, you can better assess your status and financial position. And, most importantly, it is better to consult a professional and an experienced real estate agent. After all, they are specialized in giving you the best possible advice.
In the end, it is always worth investigating all of your options.
What if I fail to pay the mortgage?
It’s crucial to comprehend the risk that comes if you’re thinking of selling your house before you pay off your mortgage. By doing so, selling your house can be risky for a few reasons;
First, you could lose your home permanently if you do not have enough money saved up for a down payment on another house, or if you cannot find a buyer quickly enough. Secondly, if there is an emergency where you need to move soon (such as losing your job), it may be challenging to keep up with paying the mortgage.
If you fail to pay your mortgage, your lender may begin foreclosure proceedings against you. This means they will attempt to sell your home to recoup the money you owe them. If you are in foreclosure, knowing your rights and options is crucial. And, most importantly, the best idea is to sell your house before foreclosure. By doing so, you can pay the remaining mortgage and closing costs from the amount you gain from the sale. This is how you would be on the safe side, at least.
Mortgages are a long-time commitment; you typically bind yourself to 20 to 30 years of repayments. At the same time, this could be a terrific way to build equity in your property so that you can eventually buy it outright. However, if things don’t go as planned, or if you must sell your house without paying off your mortgage, you must assess all the ins and outs of your decision to sell a home.
As a borrower, you know that debt comes with much responsibility; you must pay the principal and interest amount during the loan period. Indeed, the mortgage is the most significant debt you will ever carry, and if you are struggling too much to pay off debt, or are worried about loan default, consider selling your house.
While, real estate agents can guide you in matters related to selling and buying, we are also here for you!
Contact us today to see how our expertise and knowledge at Selling.House can guide you. We are happy to help you in getting your house to sell fast!