How to Sell a House With a Mortgage
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How to Sell a House With a Mortgage
Bill Buys Houses
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How to Sell a House With a Mortgage

Whether you live in a starter home or you’ve moved around a bit, there’s a good chance you might not stay in your home long enough to pay off the mortgage. But knowing what to do first when you’re trying to relocate with a mortgage can be tricky. Selling your home with a mortgage is possible, and we’re laying out the facts in this post from Bill Buys Houses, the Minnesota cash home buyers you can trust.

If you need to sell your home fast with or without a mortgage, we’ve got you covered. Check out this guide to selling your house with a mortgage and then give Bill Buys Houses a call to learn more.

Selling Your House With a Traditional Mortgage Sale

Ideally, when you’re selling your home via a traditional sale with a mortgage, your goal is to come out ahead financially, making more on your home than you actually owe. You’ll also have equity from the mortgage payments you’ve been paying throughout the duration of your homeownership.

When your buyer closes on the sale, the funds from the sale will first go toward paying off your mortgage and then any home equity loans you’ve taken out over the years. It will also cover your closing costs. After everything is paid off, any profit will be yours to use at your discretion.

Selling Your House With a Short Sale

If you need to sell your home for less than what you still owe on your mortgage payment, this is known as a short sale. Short sales are typically for situations where a homeowner needs to sell their home immediately. Frequently, short sales are used when a homeowner is facing foreclosure since the long-term consequences of a short sale are much less serious than the impact of a foreclosure. For this reason, short sales are often sometimes known as pre-foreclosure sales.

In the event of a short sale, everything from the sale will go toward paying off the mortgage. The difference between the amount of the sale and the amount still owed on the mortgage is known as a deficiency.

Before a short sale can take place, the mortgage lender has to approve it and decide on a course of action. Sometimes a lender may choose to forgive the balance of the mortgage. Alternatively, the lender may get a deficiency judgment and force the homeowner to pay off the rest of the loan. Either way, the process can be a little more complicated than a traditional home sale.

Buying a Home When You Already Have a Mortgage

Often, homeowners find themselves in the predicament of having to sell their old homes as they are in the process of buying a new one. Generally speaking, it’s ideal to sell your current home first before buying a new one so you can get the payout from your first home and apply it toward a down payment.

However, this isn’t always possible. If you have to buy your new home first, making the deal work out can require clever navigation. Without the money from your sale, you’ll need to make arrangements to come up with your down payment as well as your closing costs on the new home.

These are your options:

1.    Taking out another mortgage.

If you’re in a financial position to do so, the easiest approach could be just to go ahead and take out another mortgage and carry both of them for the time being. The upside of this approach is that you don’t have to worry about making sure your home sale goes through before you can make an offer on a place you love. However, the downside is that the market could change, and you risk getting stuck with two mortgages for a lengthy duration while you try to find a buyer for your first home.

2.    Take out a bridge loan.

Bridge loans are short-term loans that are used for both individuals and businesses. They are also sometimes called swing loans or gap financing. Bridge loans are backed by collateral and are offered at higher interest rates than traditional mortgage loans.

Bridge loans are typically offered for 2-3 weeks but can be extended for up to a year. You can use one to pay the balance on your first mortgage while you work on selling your own home or pay for your down payment and closing costs. When the sale on your home closes, the profits can be used to pay off your bridge loan.

3.    Include a home sale contingency in your new home offer.

A home sale contingency is a clause that’s included in your home purchase contract. When you include a home sale contingency, you reserve the right to exit the purchase contract if you can’t find a buyer for your home. While a home sale contingency clause can go a long way in protecting you as a buyer, however, sellers may pass your offer up for a more favorable one, so it’s important to know what you’re getting into before making an offer with a home sale contingency.

Sell Your Home As-Is to a Cash Home Buyer

If you need to sell your home quickly, waiting for a lengthy sale to go through may not be the best option for you. Fortunately working with homeowners to help them move on quickly is what we excel in at Bill Buys Houses. Whether you’re selling your home to avoid foreclosure or you’ve got a run-down home you need to sell as-is, we’ve got you covered with cash home buyers and a fast process. To get in touch with a cash home buyer in Minnesota, contact us or call to request an offer at 651-270-9191 today.

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