Can I sell a house without paying off mortgage?
I am planning to sell my extra house, for which I am paying a mortgage (15 more years to go). The mortgage rate is really low. Can I sell the house without paying off the mortgage (i.e. can I take the mortgage as a low-interest loan), e.g. for a few years (my investment return should be much higher than the mortgage interest rate)? Is this an option that I can negotiate with my lender?
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December 28th, 2009 at 1:03 pm
When you sell the house the bank will require you to pay off the mortgage before they transfer title over to the new buyer.
They do this because otherwise they would have no collateral on the money you still owe them (i.e. they couldn’t foreclose on the house from the new owner if you stopped paying.)
December 30th, 2009 at 1:18 am
No, when you sell the property, the mortgage is due.
Your sale proceeds should cover the mortgage balance, you can use what is left for your investments.
December 30th, 2009 at 1:38 am
Not to repeat what the others have said but the mortgage holder has a lien on the property which means you can’t give or sell title to someone else without satisfying the lien. The only way to satisfy a lien is to pay the amount owed. When a property is sold a title search is performed. The purpose of the title search is to find out who actually owns the property and to find out if there are any liens which would prevent the purchaser from obtaining title to the property.
December 31st, 2009 at 2:15 pm
There are a few options available to you. You can ask the lender if the note on the property is assumable. In that case, a buyer can take over the payments you once made. You may also do what is called a
“wrap around” mortgage or “all inclusive” loan. In this case, ownership of the property transfers to the buyer but the loan remains in your name. Your loan agreement may have an “acceleration clause which would make the loan all due and payable upon transfer of property to someone else so both you and the buyer must be aware of the risks involved. It’s important to have a separate account set up where an executor receives payments from the buyer, then sends those payments to the lender. In any event, it is imperative that both you and the buyer have hazard insurance for the property to protect you and the lender (bank).
January 3rd, 2010 at 5:05 am
No, you cannot.
Because there is a mortgage lien against the home, you cannot pass clear title to the new owner.
Your lender will NOT negotiate that option.
January 3rd, 2010 at 6:17 am
nope…the lien must be satisfied before title can change hands.
January 5th, 2010 at 7:15 pm
No, the property is collateral for that mortgage.
January 6th, 2010 at 3:37 pm
No because to clear a mortgage you not only pay the outstanding sum left to pay but a proportion of the interest that the bank would have charged over the 15 years.Also you will never get a cash loan at a lower rate than a mortgage rate.And if you reckon your investment return will be higher than your mortgage charge then you are sadly misguided or misinformed.You would be far better renting the house paying the mortgage of as fast as possible and then selling .I reckon you could pay the mortgage of 8 years early without incurring penalty charges ( but this does depend on your lender)then sell the house on the open market .
January 7th, 2010 at 11:23 pm
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January 12th, 2010 at 8:51 pm
You could possibly get a personal loan for the balance, pay off the mortgage and then sell. You’ll still have to pay the new loan, obviously. and probably with not as good interest rate.
January 13th, 2010 at 5:10 am
It depends mostly on the loan agreement you signed with the bank. There also may be some state rules. Lenders do not like for you to do that. They made the loan based on your credit rating, and would be uncomfortable with you selling. Also, they would like to force you to pay off your low interest maortgage. If it is good for you, it is bad for the bank. Because of this, there are usually terms in a loan agreement requiring you to pay off the loan if you sell it.
January 15th, 2010 at 6:17 pm
WOW!!! I CANNOT BELIEVE EVERYONE SAID “no”!
YES, YES, and YES- you CAN sell a house without paying off an existing mortgage.
1) If the mortgage is assumable, by all means yes! All you need to do is assign payments to the buyer of the property. It may require the lenders consent or it may also be contractually prohibited by a due on sale clause.
2) If the mortgage has a due on sale clause but it is current on payments, why would the bank call the loan if the payments kept coming in??? If it’s not broken, don’t fix it right?
-They have got bigger fish to fry such as the many, many foreclosures that have been occurring all across the nation.
You can even create a Wrap around mortgage and create a revenue stream from the sale by having the attorney who processes the transaction create an “All Inclusive Trust Deed” (aka AITD) and ensure that the larger mortgage has a higher interest rate than the smaller mortgage.
And to ensure that the bank does not call the loan, you can deed the house into a trust that you own who then sells the property creating the wrap.
But consult an attorney about the matter for sound legal advice.
BUT HERE’S THE GREAT PART-
Once you sell the property and create your wrap, you can sell the wrap to cash4promissorynotes.com if you follow “the best note” guidelines. But call them up just to make sure they can buy it.
Call me up, my contact info is on the site I just mentioned, I’ll answer any further questions you have.
January 16th, 2010 at 6:37 pm
not legally.
January 17th, 2010 at 10:05 am
No. The buyer would not have a clear title which any lender requires. Also your mortgage papers have a “due on sale” clause- meaning you can’t sell till they are paid off.
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