People rarely live in one place for 30 years — in fact, most Americans move every six to 10 years. That means selling a house with a mortgage is actually the norm, so there’s no reason to be nervous about it.
However, it’s still important to make sure that you approach the sales process in a way that makes sense for your situation, especially if you still owe on your home. Here are some tips that will help you sell your home successfully and move on to your next property!
Check Your Current Mortgage Payoff & Penalties
How much money do you need to pay off the mortgage on your home if you moved today? Contact your lender and get a quote. Be sure you also ask how long that number is good — it could be 10 days, or it could be as long as 30.
While you’re speaking to your lender, ask if there are any fees for an early payoff. Sometimes a mortgage lender will try to protect themselves from losing a loan to refinancing by charging you if you pay the mortgage off early.
If it’s a soft penalty, it will only apply to refinance and not to sell the home. A hard penalty applies in both cases. Most of the time, you’ll only have a penalty in the first one to three years of owning your home.
Work With a Realtor to Price the Home
Once you have the numbers, work with an experienced local seller’s agent to set an appropriate price for your home sale. Ideally, it will cover your mortgage and leave with a profit, but the reality will depend on the market conditions and how much equity you have built up.
The actual profit you’ll get from your house sale will be the sale price, minus fees, minus the payoff amount on your mortgage. Fees to keep in mind include Realtor commissions, attorney fees, property taxes, and transfer and title fees.
If the sale price is more than what you owe plus fees, you’ll get a profit. You can use this toward a new home or keep it in the bank for whatever needs you have.
Find a Title Company to Facilitate the Exchange
Your Realtor can connect you to a title agent that will help facilitate the financial exchange once you accept an offer on your home. The agent will research your house’s title to make sure there aren’t concerns that might hold up the sale.
From there, you’ll sign all the required documents at the closing, and your title agent will send the final mortgage payoff payment to your lender and transfer the title to the new owner.
Possible Stumbling Blocks
Most of the time, a home sale is reasonably simple and your Realtor is able to move you through the process quickly. However, there are sometimes problems that arise. Here are some things to watch for.
If you have a prepayment penalty that you can’t afford, you might need to negotiate with your lender directly. If you have options, it probably makes sense to stay in your home long enough to avoid that penalty. If not, you might have to get another type of loan to cover the fee.
It’s possible that you may need to sell a home that you don’t have equity on or you owe more than it’s worth. This situation happened to a lot of Americans during the housing crash of 2008-09. In this case, the home sale won’t cover the mortgage and fees. You may need to stay in the home and build up equity, or you may have to work with your lender to arrange a short sale.
It Pays to Work With Professionals
As a homeowner, it’s easy to make mistakes in the home selling process. If you list yourself For Sale By Owner (FSBO), buyers will try to take advantage of you. Buyer’s agents know that you aren’t a skilled negotiator and don’t know the details of a real estate transaction. Using a seller’s agent will get you a significantly higher price.
Looking for a way to save on Realtor commissions, while still getting a full-service experience? Consider a Clever Partner Agent. They are experienced local Realtors who will give you all the services you need while selling the home for a flat fee of $3,000 or 1% of the price if the home sells over $350,000.
This is a significant savings over most full-service Realtors, and it can make a big difference in terms of how easily you can pay off your mortgage and walk away with a profit. Don’t skip a professional. Just choose an affordable one!