Most home loans have a repayment period of approximately 30 years. So, what happens if another house has piqued your interest before you pay off your mortgage? The average homeowner lives in their home for under 13 years before selling, according to a survey conducted by Zillow in 2018.
Should you sell your Fort Worth home before you’ve paid off your mortgage? Keep reading to find out.
How Does a Mortgage Work?
A mortgage, also known as a deed, is the legal document you signed when you purchased your home; this document gives your lender the right to take away your property if you fail to pay your loan each month. Your mortgage covers several costs, including principal, interest, taxes, and homeowner’s insurance. Fortunately, you can sell your home if you’re still paying off your mortgage, but the process is more complicated.
Discover how you can sell your property if you’re paying off your mortgage.
Who’s Responsible for Paying the Mortgage While My House Is Listed?
You’re responsible for your home until the day you close the sale, meaning you must continue making mortgage payments during this time. The average time between accepting an offer and closing on a sale is approximately 45 days.
If you’re still confused, refer to your settlement statement. All of the answers to your questions related to who pays for which expenses are in this document. If you owe a mortgage payment upon closing, the lender will subtract it from the proceeds of your sale. The title company will issue checks to all parties who are due to a final payment.
A Guide to Selling Your Home Before You Pay Off Your Mortgage
Follow these three steps before selling a home with a mortgage.
Step 1: Reach out to your lender: First, contact your mortgage lender and ask about the status of your mortgage payoff as it pertains to selling your home. The quote they’ll give you is valid for a month, and it includes fees you’re responsible for upon closing.
Inspect your loan documents to see if there’s a prepayment penalty, as this impacts how much money you net upon selling. A prepayment penalty is a fee you need to pay if you choose to sell before you pay your loan in full.
Step 2: Calculate your asking price: Your real estate agent will help you set a reasonable sale price for your home. Your asking price should cover your mortgage payoff, closing costs, agent commission, attorney fees, taxes, and other expenses you incur by preparing for your sale.
Step 3: Ask for an estimated settlement statement: Does it make financial sense for you to sell? Will you be able to cover an agent’s commission and closing costs? Your real estate agent will open an escrow account for you, and your title agent will provide a breakdown of your estimated closing costs; this will give you an accurate picture of how much money you’ll earn.
Texas Sell Now Is Here for You
Selling your home with a mortgage is difficult enough, and you also have to worry about meeting the buyer’s demands. If you’re a resident of Fort Worth, Texas, you can skip the hassle and sell your property to Texas Sell Now. We’re ready to buy your house in any condition for a speedy, all-cash offer.
We know things are a bit unstable right now due to the COVID-19 pandemic, but we’re available to help you during this time. Contact us today if you have any questions.