You’ve decided to sell your Texas home after a few years, but what happens to your mortgage after you sell?
In the olden days, people would buy one house in their lifetime and stay in it until it was paid off. That was their home for retirement, and people rarely moved once they bought a house.
That’s no longer the case, and most people now will buy and sell several houses in their lifetime. Many homeowners worry about the process of paying off their mortgage when they sell their house, but it’s much simpler than it might seem. Here’s everything you need to know about your mortgage when selling your home.
The Typical Process
In a typical home sale, the selling price is more than is owed on the mortgage. Owners who have been paying down their mortgage for several years are often able to cash in on the amount that is above and beyond their remaining mortgage.
Both you, as the seller, and the buyer will go through a closing process when you sell your house. Closing is when the ownership of the house is transferred from you to the buyer. The buyer works with a lender to provide the funds needed to purchase the house at closing. Those funds are used for the following:
- Pay the remaining amount on your mortgage
- Pay off any home equity loans you might have
- Pay your realtor commissions and closing costs
What happens to your mortgage during a typical home selling process is that it’s paid in full. Any remaining money after all the above debts are paid is paid out to you, the seller, in the form of a check. Most sellers will use the excess cash as a downpayment on their next house, but you can use it however you choose.
Not all house sales are typical, and some situations need to be handled differently. Here’s a look at some nontypical house sales and how the mortgage is handled with them:
- Short Sale – A short sale is when the home is sold for less than the amount of the remaining mortgage. If you’re planning to sell your house for a loss, it’s extremely important that you discuss things thoroughly with your lender.
- Buying and Selling Simultaneously – Buying before you sell your house is a bit more complicated. You have a few options for how to finance your new home.
- You can put in a contingency offer on the new home, which means your offer to buy the home is contingent upon your ability to sell your current home.
- You can take out a bridge loan, which is a short-term loan that can be used to pay off your old mortgage and begin making payments on your new home until you sell your old home.
- You can carry two mortgages. Buy the new house and hope your old house sells quickly.
Legacy Home Buyers Can Help
If you’re worried about what happens to your mortgage when you sell your Texas home, Legacy Home Buyer can help! When you sell your house to us, you can go ahead and find your new home without worrying about contingency offers or carrying two loans. We buy homes in Dallas, Texas in any condition and can close fast so you can move on to your next adventure. Contact us today to get your cash offer!