You've decided to make the plunge and sell your home. Many people ask, "What will happen to my mortgage when I sell my home?"
What Does Happen To Your Mortgage?
If you have a house, then you 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. It would depend on the type of mortgage you have, but the amount due on the loan should decrease during the time you lived in the home and made monthly payments.
If you sell your home, the question would be what would happen to the then due balance on the mortgage? Actually, you have to pay the financial institution out of the proceeds. 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 your home is worth $300,000 and you owe $280,000 on the mortgage, then there is little or no profit, so you shouldn't sell it.
You might have plenty of equity built up in your home, but be aware that your mortgage costs can still be higher than you expect. Most modern mortgages have restrictive penalties. These penalties will encourage you to hold on to your home for a certain period of time to allow the bank to recover a certain amount of interest. So this means that the bank is trying to lock in a certain amount of profit from the loan.
Lending institutions are quite creative when they come up with restrictive penalties. Many would include a penalty if you sell or refinance your 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. Read your mortgage loan documents carefully.
Regardless, you mortgage is going to be paid off as part of the sales process. The amount will depend on the nature of your loan.
What Does Happen To Your Mortgage?
If you have a house, then you 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. It would depend on the type of mortgage you have, but the amount due on the loan should decrease during the time you lived in the home and made monthly payments.
If you sell your home, the question would be what would happen to the then due balance on the mortgage? Actually, you have to pay the financial institution out of the proceeds. 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 your home is worth $300,000 and you owe $280,000 on the mortgage, then there is little or no profit, so you shouldn't sell it.
You might have plenty of equity built up in your home, but be aware that your mortgage costs can still be higher than you expect. Most modern mortgages have restrictive penalties. These penalties will encourage you to hold on to your home for a certain period of time to allow the bank to recover a certain amount of interest. So this means that the bank is trying to lock in a certain amount of profit from the loan.
Lending institutions are quite creative when they come up with restrictive penalties. Many would include a penalty if you sell or refinance your 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. Read your mortgage loan documents carefully.
Regardless, you mortgage is going to be paid off as part of the sales process. The amount will depend on the nature of your loan.
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