What Happens To My Mortgage When I Sell My Home

What Happens to​ My Mortgage When I​ Sell My Home
You’ve decided to​ make the​ plunge and sell you​ home .​
More than a​ few people have innocently asked me,​ What happens to​ my mortgage when I​ sell my home?
What Happens to​ My Mortgage When I​ sell My Home
If you​ own a​ home,​ you​ undoubtedly are carrying a​ mortgage on​ it .​
a​ mortgage is​ simply a​ loan from a​ bank or​ financial institution for percentage of​ the​ value of​ the​ home,​ which you​ pay to​ the​ person you​ purchased the​ home from when you​ bought it .​
Depend on​ the​ type of​ mortgage you​ have,​ the​ amount due on​ the​ loan should have decreased during the​ time you​ lived in​ the​ home and made monthly payments .​
When you​ go to​ sell your home,​ the​ simple question is​ what happens to​ the​ then due balance on​ the​ mortgage? the​ simple answer is​ the​ financial institution is​ going to​ be paid out of​ the​ proceeds of​ the​ sale before you​ see anything .​
As a​ result,​ it​ is​ critical that you​ calculate in​ the​ loan repayment amount when determining if​ it​ makes sense to​ sell a​ home .​
If you​ have a​ home worth $300,​000 and owe $280,​000 on​ the​ mortgage,​ you​ are going to​ realize little or​ no profit after the​ costs associated with the​ sale and probably shouldn’t sell it .​
If you​ have plenty of​ equity built up in​ the​ home,​ your mortgage can still end up costing you​ more than you​ originally expected .​
Many modern mortgages have restrictive penalties built into them .​
These penalties are designed to​ encourage you​ to​ hold onto the​ home for a​ set period of​ time,​ usually a​ couple of​ years,​ so the​ bank can recover a​ certain amount of​ interest up front .​
Put another way,​ the​ bank is​ trying to​ lock in​ a​ certain amount of​ profit on​ the​ loan .​
When it​ comes to​ these restrictive penalties,​ lending institutions get pretty creative .​
Many will include a​ penalty if​ you​ sell or​ refinance the​ property within the​ first two years of​ the​ loan period .​
The penalties can be anything from the​ equivalent of​ three months of​ payments to​ a​ preset amount or​ even a​ percentage of​ the​ loan .​
State law often influences these issues,​ so you​ need to​ read your mortgage loan documents closely .​
Regardless,​ you​ mortgage is​ going to​ be paid off as​ part of​ the​ sales process .​
The exact amount will depend upon the​ nature of​ your loan.

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