What Happens to My Mortgage When I Sell My House?
When you sell your house, your mortgage is paid off in full from the sale proceeds at closing. The title company handles this automatically. You walk away with whatever is left after the mortgage payoff and any other costs.
Here is how it works step by step. Before closing, the title company contacts your lender to get a payoff statement. This document shows exactly how much you owe, including the principal balance, accrued interest, and any fees. The payoff amount is usually valid for 10 to 30 days.
At closing, the title company distributes the sale proceeds. The mortgage payoff goes directly to your lender. Closing costs, commissions (if applicable), and any other liens are also paid. You receive the remaining balance, which is your net proceeds.
If you sell to Acquily, the process is even simpler because there are no commissions or closing costs to deduct. Your net proceeds equal the sale price minus only the mortgage payoff.
What if you have a second mortgage or HELOC? Both are paid from the proceeds at closing, in order of priority. The first mortgage is paid first, then the second mortgage, then any other liens.
What if you owe more than the sale price? This is called being underwater. In this case, you would need to either bring cash to closing to cover the difference or negotiate a short sale with your lender. See our guide on selling when you owe more than your home is worth.
One important note: there is no prepayment penalty on most mortgages originated after 2014, thanks to federal regulations. If your mortgage is older, check your loan documents or ask your lender about any prepayment penalties.
Frequently Asked Questions
Do I have to pay off my entire mortgage when I sell?
Yes. The full remaining balance, including accrued interest, must be paid at closing. This happens automatically through the title company.
Can I sell if I have two mortgages?
Yes. Both mortgages are paid from the sale proceeds at closing. The first mortgage is paid before the second. If proceeds are insufficient, a short sale may be needed.
What is a mortgage payoff statement?
A payoff statement is a document from your lender showing exactly how much you owe as of a specific date. The title company orders this before closing to ensure accurate payment.
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