Can I Sell My House If I Still Owe on My Mortgage?

Can I sell my house if I still owe money on my mortgage?
Yes. Most people who sell still have a mortgage. Your loan is paid off at closing from the money the buyer pays, and you receive what is left after the payoff and your closing costs.

The Mike Webb Team (Mike and Claudia Webb, RE/MAX Allegiance) helps homeowners in Arlington, Northern Virginia, Maryland, and Washington, DC get their homes ready to sell and sold.

At closing, the settlement company asks your lender for the exact amount needed to pay off your loan. That amount comes out of the sale money first. Then your closing costs come out. What is left goes to you.

A payoff statement shows the total you owe to pay the loan in full as of a certain date. It is usually more than the balance on your monthly statement, because it adds interest up to the payoff date and any fees.

Under federal rules, your lender or loan servicer must send an accurate payoff statement within a reasonable time, and no more than seven business days after a written request, with a few exceptions such as a loan in foreclosure or bankruptcy. Source: Consumer Financial Protection Bureau, Regulation Z, section 1026.36(c) (3).

Some loans have a prepayment penalty, a fee for paying off all or part of the loan early. Many loans do not. The CFPB explains prepayment penalties here. Read your loan papers or call your lender before you list, so there are no surprises.

A home equity loan or line of credit is paid off at closing the same way. The settlement company asks each lender for its own payoff amount. If you have a line of credit, ask your lender how to close it so it is not used again.

Talk with your lender before you list. You may need to bring money to closing or ask the lender for other options. We can show you what similar homes near you have sold for, so you know where you stand before you decide anything.

A home that shows well gives you a strong start. Through The White Glove Home Sale Method, we handle painting, repairs, staging and deep cleaning at no additional cost to you. To plan ahead, read What Costs Will I Pay as a Seller at Closing in Virginia?.

Do I need to pay off my mortgage before I list?
No. Most sellers list with a mortgage. It is paid off at closing.

Who orders the payoff statement?
The settlement company usually asks your lender for it before closing. You can also request one yourself in writing.

Does this cover a rental or second home?
The payoff works the same way, but tax and loan rules can differ. Ask your lender and a tax professional.

Call or text Claudia at 703-350-3884 or visit claudiawebb.com.

The Mike Webb Team, RE/MAX Allegiance. Arlington, Virginia. Equal Housing Opportunity.