Owning a home is a great accomplishment. But houses are expensive, so the path to ownership for many is only made possible by taking out a mortgage on the home. In today’s world, it’s not unusual for a homeowner to move before paying off that mortgage. What happens to the mortgage when you sell? The experts at We Buy Houses Colorado Springs have the answers.
What Happens to a Mortgage in a Typical Sale?
If it is a traditional sale, you should be able to sell your property for more than you actually owe on your mortgage. If you have been making mortgage payments for years, you will build up equity in your house that can be cashed in when the house sells. The proceeds you receive from selling a home should pay off the remaining amount of the mortgage and hopefully leave you with enough money to make a down payment on your new home.
However, if you cannot pay off the mortgage completely, then your situation is more complicated.
What If You Cannot Pay Off the Mortgage Completely?
If the sale price of your home is not high enough to pay off the mortgage and other costs, your property purchase loan is considered to be “underwater.” Selling a house with a mortgage that is underwater is a more complicated process, and a traditional sale may not be the best solution. However, there are still other options to consider.
Sell Your Home in a Short Sale
In a short sale, which is also known as a preforeclosure sale, you sell your property for less than the balance remaining on your mortgage. To short sell your home, you need to write a hardship letter to a mortgage lender explaining why your mortgage cannot be completely paid off. You also need to submit supportive documentation, including tax returns and pay stubs. If your application is approved, your home will be listed as a short sale, and all offers received on the property will be forwarded to the lender/seller, who will accept, reject, or counter them. When your property is sold, there are two possible scenarios: your lender will either forgive the difference or get a deficiency judgment against you. If they get a deficiency judgment, you may have further financial obligations.
Sell Your Property to a Real Estate Investor
Selling your home to an investor is a quick and effective solution for your mortgage problem. It is also an excellent option for those who want to sell their house fast because investors can close on the sale in a few days. They purchase homes in any condition, so you will not have to make any repairs or improvements. Plus, you will be paid in cash. If you are interested in this option and have a property to sell in Colorado, We Buy Houses Colorado Springs is ready to help. We buy all types of homes, including houses, townhomes, condos, and apartments. We purchase homes in all conditions as-is and pay you cash. All you need to do is fill out the short online form, and we will contact you within 24 hours to arrange a time to view your home. Then you will receive a cash offer that you can either accept or deny. If you have any questions, do not hesitate to give us a call at 719-301-2590 to talk to one of our experienced agents.