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Real Estate Q&A: "When I Sell My House What Happens with the Mortgage?"

A lot of homeowners often ask, “When I sell my house, what happens with the mortgage?” This is an excellent question and something that every homeowner should know more about.

There are several things you need to do before you list your home for sale.


Calculate Your Mortgage

The first step may seem obvious, but you need to start by finding out how much you owe on your mortgage and if you will have to pay any penalties for paying it off early.


Selling Your Home in an Ideal Market

Typically, in an ideal world, when you sell your house, the payment you receive minus closing costs and taxes will cover the balance remaining on your mortgage.

For example, if a home in the White Rock real estate market sold for $800,000 and the family only owed $200,000 on their mortgage, they would receive $600,000 before deducting closing costs and taxes.

In this scenario, the other closing costs you must keep in mind include any fees you have agreed with the buyer to pay, your realtor fees, any lawyer fees, any fees you may incur for paying your mortgage early, all property taxes up until the date of sale.


Selling Your Home in an Unideal Market

The real estate market is unpredictable and sometimes the price of your home can drop. Anyone who owned a home through 2008 remembers this very well.

You should always try to avoid selling your home for less than you paid for it. However, sometimes circumstances are unfair and you have no choice but to sell.

If you have to sell your home for less than it is worth, you will have to cover the remainder of your mortgage out of pocket.

For example, if you paid $800,000 for your home and sold it for $600,000, you would still need to pay the other $200,000 that you owe on your mortgage. You will also be on the hook for any closing costs associated with the sale.


The Short Sale

If you have to sell your house through a short sale, you will have to communicate with your bank and see if they are willing to negotiate a lower mortgage payout. Most banks will only approve of a short sale if the housing market is crashing, like in 2008, or if they know the mortgage is bound to fail and the property will become worthless.

Once sold, the proceeds you receive would be paid back to the institution that holds your mortgage.



If you still have questions about selling your home and resolving your mortgage, HomeLife White Rock is here to help. We have been serving the White Rock real estate market for many years and we understand how to help you get the best price for your home, regardless of the market. Selling your home doesn’t have to be hard if you have the right real estate team behind you.


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