If I have a mortgage and then sell my house do I have to pay it off or can I purchase a new house with it?
I have a 2,000 mortgage and I’m trying to sell my house (despite the poor market). We have picked out a 5,000 house that we would like to buy when ours sells. Will my lender require us to pay them off when we sell our house or will we be able to use the money we make off our sale and just purchase the new home and continue making our normal monthly payment?
May 29th, 2011 at 9:22 pm
You don’t have a choice…you have to pay off the first mortgage or else you cannot transfer clear title…the first mortgage company has a lien against the property and no buyer’s bank is going to allow that transaction to close until it’s removed.
May 29th, 2011 at 9:22 pm
The sale will not go through unless the mortgage loan is paid off. Morgage loans are not transferable to another property.
May 29th, 2011 at 9:22 pm
You have to pay it off and reapply for a new mortgage–lenders make their money up front on the loan application fees and would not even consider your scenario.
May 29th, 2011 at 9:22 pm
you’ll probably have to pay off the 1st mortgage and use the profit as a down payment on a new mortgage,
May 29th, 2011 at 9:22 pm
No. Every mortgage has a sale clause, unless your mortgage allows another to assume it. Even then, the new people will be paying the mortgage not you. Assumable mortgages are not very common any more. You cannot have a loan on a house you don’t own.
May 29th, 2011 at 9:22 pm
of course you have to pay off your first loan when you sell it!!!! How are you going to give clear title to the new owners. Think about it!!
May 29th, 2011 at 9:22 pm
you pay off the old house mortgage first and any money left over after sales commission (about 6%) and poaying off old mortgage and closing costs you use as a down payment towards new house – with a new mortgage – new monthly payment – taxes will be different, mortgage rate may be different than old mtg, etc
May 29th, 2011 at 9:22 pm
Good Question! When your house sells, you’ll then pick out another house, make an offer, and hopefully it will all gel together.
The proceeds from the sale of your home, minus any Real Estate charges (usually around 7%) will then be applied to the mortgage on the second home. In essence, the first mortgage is actually paid off and discharged, and new second mortgage is then, after being applied for, created. Payments, rate, term, are all separate, new and different for your new purchase.
Hope that helped and good luck with the house selling. It can take a while, but if you contact with any questions I can help.
Cheers.
May 29th, 2011 at 9:22 pm
When you sell your current home, you MUST pay off the mortgage. That mortgage is a lien on the property and must be paid off and released before the new owner can take title. You will need to get a new loan for the new home. When you make an offer on another house, you should make it contingent on the sale of your current home. You don’t want to be stuck with 2 mortgage payments until your house sells. Many times, you can arrange for the purchase and sale to close on the same day.
Also, noticing some of the other answers here. Not all mortgage lenders charge up front fees or make their money from fees. Most lenders will consider your situation, as we do every day. it is very common and normal for someone buying a house to have to sell their existing home first.
May 29th, 2011 at 9:22 pm
You will have to pay off the current mortgage. Any proceeds from the sale are yours after that and you can use it for a down-payment on your next home.