Yes, you can sell your home in the metro Detroit area even if you still have a mortgage. Most homeowners sell their properties before fully paying off their mortgages. The key is understanding how to navigate the process effectively to ensure a smooth transaction.
Understanding Your Mortgage Balance
Before listing your home, it’s crucial to know your current mortgage payoff amount. This figure isn’t just your remaining principal balance; it may also include interest up to the payoff date and any applicable fees. Contact your lender to obtain an accurate payoff statement.
Calculating Your Home’s Market Value
Determining your home’s current market value helps you understand potential equity—the difference between your home’s value and the mortgage balance. A professional appraisal or a comparative market analysis (CMA) conducted by an experienced real estate agent like Leslie Martin can provide this insight.
Covering Mortgage Payoff and Selling Costs
The proceeds from your home sale will first go toward paying off your existing mortgage. Additionally, you’ll need to account for closing costs, which typically range from 2% to 5% of the sale price. These costs can include agent commissions, title fees, and other expenses.
Handling Insufficient Sale Proceeds
If your home’s sale price doesn’t cover your mortgage balance and closing costs—a situation known as being “underwater”—you have a few options:
- Short Sale: With lender approval, you can sell the home for less than the owed amount. This option can impact your credit score and requires thorough documentation.
- Bringing Cash to Closing: If possible, you can pay the difference out of pocket to satisfy the mortgage and associated costs.
- Loan Modification or Refinance: While less common in selling scenarios, discussing these options with your lender might provide temporary relief until you can sell under better conditions.
Due-on-Sale Clause
Most mortgages contain a due-on-sale clause, which stipulates that the full loan balance becomes due upon the sale or transfer of the property. This means you can’t transfer your mortgage to the buyer; instead, the mortgage must be paid off at closing.
Mortgage Assumption
Some loans, like certain FHA and VA loans, are assumable, allowing the buyer to take over your existing mortgage under its current terms. However, the buyer must meet the lender’s qualification criteria, and not all loans offer this option.
Steps to Selling Your Home with an Existing Mortgage
- Consult with a Real Estate Professional: Partnering with a knowledgeable realtor like Leslie Martin ensures you understand the local market and receive guidance tailored to your situation.
- Determine Your Mortgage Payoff Amount: Obtain a payoff statement from your lender to know exactly what’s owed.
- Assess Your Home’s Value: Have your home professionally appraised or request a CMA to set a competitive listing price.
- Calculate Potential Proceeds: Subtract your mortgage payoff and estimated closing costs from your home’s market value to estimate net proceeds.
- Prepare Your Home for Sale: Enhance your home’s appeal through staging, necessary repairs, and effective marketing strategies.
- Review Offers Carefully: Evaluate offers not just on price but also on terms, contingencies, and the buyer’s financing strength.
- Close the Sale: During closing, your mortgage will be paid off from the sale proceeds, and any remaining funds will be disbursed to you.
Conclusion
Selling your home while you still have a mortgage is a common process, but it’s essential to plan strategically. Working with a seasoned metro Detroit area Realtor like Leslie Martin can help ensure you get the best price for your home while smoothly navigating your mortgage obligations.
