You've decided that you want to sell your house. More than a few people have innocently asked me, "What happens to my mortgage when I sell my home?"
What Happens to My Mortgage When I sell My Home
If you own a home, you undoubtedly are carrying a mortgage on it. A mortgage is simply a loan that you get from a bank or a financial institution for a percentage of the value of the home, which you pay to the person that you bought the house from. Depend on the type of mortgage you have, the amount due on the loan should have decreased during the time you lived in the home and made monthly payments.
So what would happen to the then due balance on the mortgage if you sell your home? The simple answer is the financial institution is going to be paid out of the proceeds of the sale before you see anything. So you have to calculate the loan repayment amount. If you have a home worth $300,000 and owe $280,000 on the mortgage, you are going to realize little or no profit after the costs associated with the sale and probably shouldn't sell it.
If you have plenty of equity built up in the home, your mortgage can still end up costing you more than you originally expected. Nowadays, many mortgages come with restrictive penalties. These penalties are designed to encourage you to hold onto the home for a set period of time, usually a couple of years, so the bank can recover a certain amount of interest up front. Put another way, the bank is trying to lock in a certain amount of profit on the loan.
You should know that lending institutions can come up with very creative restrictive penalties. Many would have penalties if you sell or refinance your home within the first two years of the loan period. The penalties can cost a lot. The state law often influences these, so make sure to read your mortgage loan documents well.
Remember that the mortgage will be paid off when you sell your property. The type of loan you get will dictate the amount.
What Happens to My Mortgage When I sell My Home
If you own a home, you undoubtedly are carrying a mortgage on it. A mortgage is simply a loan that you get from a bank or a financial institution for a percentage of the value of the home, which you pay to the person that you bought the house from. Depend on the type of mortgage you have, the amount due on the loan should have decreased during the time you lived in the home and made monthly payments.
So what would happen to the then due balance on the mortgage if you sell your home? The simple answer is the financial institution is going to be paid out of the proceeds of the sale before you see anything. So you have to calculate the loan repayment amount. If you have a home worth $300,000 and owe $280,000 on the mortgage, you are going to realize little or no profit after the costs associated with the sale and probably shouldn't sell it.
If you have plenty of equity built up in the home, your mortgage can still end up costing you more than you originally expected. Nowadays, many mortgages come with restrictive penalties. These penalties are designed to encourage you to hold onto the home for a set period of time, usually a couple of years, so the bank can recover a certain amount of interest up front. Put another way, the bank is trying to lock in a certain amount of profit on the loan.
You should know that lending institutions can come up with very creative restrictive penalties. Many would have penalties if you sell or refinance your home within the first two years of the loan period. The penalties can cost a lot. The state law often influences these, so make sure to read your mortgage loan documents well.
Remember that the mortgage will be paid off when you sell your property. The type of loan you get will dictate the amount.
About the Author:
Let us show you the best Playa Del Carmen real estate and guide you through the process of buying property.
Search
Custom Search