Can I Sell My House And Retain A Prior Mortgage?

Since a mortgage creates a lien on a specific piece of property, a person cannot sell his or her house and retain the mortgage. It must be paid off when the home is sold.

What Exactly Is A Mortgage?

A mortgage is created when someone borrows money from a bank or other lending institution to finance the purchase of a home or other piece of real property. The mortgage is not what the borrower is actually paying for the house, but the difference between the agreed upon sales price and all other costs and fees associated with obtaining the mortgage loan. Your monthly payments pay down your loan amount over time.

Why Can’t I Keep My Current Mortgage?

In order to sell your home and convey title to a new owner, your existing mortgage must be paid off. Though it can vary by state, a title company usually provides a title insurance policy to the new buyers. They are guaranteeing that there are no outstanding legal claims on the property. Your mortgage is a legal claim. Think of it as both you and your lender owning your home.

How Much Money Will I Receive Once My Mortgage Is Paid Off?

You will receive the sales proceeds less any real estate commissions, closing costs, fees or other obligations you have contracted for relating to the sale. The lender is owed what remains on your loan balance plus any accrued penalties or interest. Many sellers forget or do not realize that mortgage interest is paid in arrears. Even if you close on the last day of the month, you still owe your lender for the prior month’s interest. So if you close December 31, 2009, and you already made your December house payment, you still owe your lender 31 days of interest.

Related posts:

1. What Happens To A Second Mortgage After Foreclosure?
2. Will My Closing Costs Be Higher If I Have Bad Credit?
3. How Do I Qualify For A VA Home Loan?
4. What Are Hard Money Mortgages?
5. Can I Get A Bad Credit Mortgage With A Lien?