Can You Sell A House with an On-Going Mortgage?

Have you ever heard of buyer’s remorse? If not, you might still have an idea of what it is – because we’ve all been through it. Imagine buying a laptop for $1000, then the following week, a better version comes out at the same price. You know how that feels, right?

With real estate, many people go through a similar thing. Sure, you might not regret your choices in a few days, weeks, or months, but after a few years, you start thinking if it might be better to move out and start again.

There are plenty of reasons why someone would think of starting over. From stuff like having terrible neighbors or experiencing paranormal phenomena (if you believe those kinds of stuff) to heavier concerns such as divorce or transitioning to a job in a different state.

Life happens. There’s only so much we know about the future. And this is where buyer’s remorse comes into our conversation. In our earlier example, even if you didn’t know that a new model of the laptop you just bought would be coming out, it’s still possible for you to sell and buy again. The problem is that it usually comes at a loss. But would it be the same thing for houses and other forms of real estate? Let’s see.

Disclaimer: This is an article for educational purposes only. Please do your own research and consult with professionals such as attorneys, accountants, or real estate agents. 

It’s a Common Thing

As mortgages have been existing for years now, you know that someone else had asked this question way before you did. Not just “someone” else, but MANY others. Even without the statistical data, the fact that “buyer’s remorse” is a thing proves that many people would go through these things even when it comes to buying their homes.

Because many people have gone through these problems, many have already developed solutions to solve them. There are already ways to sell your house even if they’re still on a mortgage. So, to answer your question, YES – you can sell your house with a mortgage. In fact, many people do this!

How Does it Work?

It’s pretty simple, actually. And you’ve probably already thought about it.

You use the proceeds of the sale to pay off your existing mortgage balance!

Easy, right? Not only will you be able to pay off the debt, but because your home appreciates in value, you can get more out of the sale for your benefit! This is good to know, especially if you’re planning to go for another mortgage.

However, it’s not all sunshine and rainbows. Sure, many properties appreciate in value, but what if the proceeds of the sale don’t cover the mortgage balance? You’d have to pay the difference from your own pocket. If you intended to buy another property, it could put you in a bad spot – lenders would most often hesitate when they see an unpaid mortgage balance after a sale. This usually happens if the seller can’t keep up with the payments early on or if the housing market suddenly goes bad.

What Should You Do?

You can start with knowing the value of your property. You can use calculators online, but they’re not really accurate. If you’re serious about the decision to sell, it’s best to consult a realtor or a real estate agent. They have the tools and experience needed to make an analysis of the market and can definitely help you make the decision to continue or not.

Next, you also have to know how much debt you still have on the house. It’s as simple as getting that number from your lender or your statement. The amount should also include the interests until the loan is paid in full (the bank has to make their money as well). Remember that a few thousand dollars could significantly impact your budget if you’re trying to move.

After you get these numbers, you need the help of your real estate agent again (in fact, they help you out through the entire process. It’ll be tough for the average joe to sell a house on their own, so you’d need their help to do this for you. They run the numbers for you (which means you can know how much money you’re going to get after the sale), which, again, helps you get to the next step, which is determining the correct price of the home.

You can’t just guess how much you’d sell the house for. Well, you can, but it’ll be an absurd thing to do. That’s why you’ve got your agent to help you out. By looking at the market, they should be able to tell you the price range you can list the house for. Put it too high, and you risk the listing being on the market for too long (which is a bad thing). Put it too low, and you lose out on some sweet cash! (Note: Your agent might suggest, or might be expecting, you to do some renovations on the home. This is a common thing to do since you can boost the price up for a relatively lower cost.)

Once the price has been decided and the home has been listed on the market, you’re obviously going to be waiting for the fish to come nibble on the hook. Depending on the setup you have with your agent, there may be physical or virtual home visits. In any case, once someone accepts the offer, the house would go through an appraisal and inspection. Once everything is done, you’re pretty much good to go. The escrow company would handle the transfers of the funds to the lender to pay off the mortgage.

But what if you don’t have time for all of this? There’s another option to consider. You can choose to sell the home as-is. It can be as quick as a week, where selling the home could go for months! You may lose out on some value on the payment, but if time is a bigger enemy than money for you, then this may be a better solution. If you’re in the Florida area, try Shorefront Investments! We’re Florida-based real estate investors looking to buy and sell properties fast. You can give us a call at (850) 713-4866, send us an email, or fill a form on our front page! Want to buy properties instead? You could be one of our buyers by joining our buyers’ list!