Home sellers are a busy lot. They need to have their houses listed and marketed. Many sellers are preparing their homes for open house visits while they’re simultaneously researching other homes and neighborhoods that they’d consider living in.
Homeowners may sometimes still have a remaining balance on the mortgages for the homes that they are trying to sell. The exact amount can vary depending on how much money was borrowed, the contract terms, and the length of the loan. This balance must be paid to the lender in full before the seller can receive any net proceeds from the transaction.
Selling a home in Utah can take time. The entire process may not be completed for several weeks or months. Different people will become involved at certain stages, and there could be unexpected problems or delays from time to time. You should still be able to achieve your goal in most instances. Determination, patience and a solid plan of action are essential to success.
To determine how much money you will make from the sale, you need to take the following actions:
1. Find out how much is still owed on the mortgage.
One of the first things that you should do after putting your house up for sale is determining how much is remaining on your mortgage loan.
Your lender should be able to provide you with a payoff amount. The payoff amount is the money that will need to be paid to fulfill the loan and can include any applicable interest that may be assessed until the loan is completely paid off.
The current balance on your most recent mortgage statement might not necessarily have the total interest that will be due. Lenders are required by the Consumer Financial Protection Bureau to supply home sellers by a given date with the dollar amount that will satisfy the debt.
You’ll probably talk to your mortgage lender again before the transaction has been finalized to obtain the specific payoff amount. That sum will be subtracted from your proceeds to complete your loan obligation.
2. Calculate your net proceeds.
If you want to determine how much money you’ll make from the sale, you can take the price that was accepted before the purchase agreement was drafted and subtract the following items:
- Property taxes
- Realtor commissions
- Any associated attorney fees
- Title taxes, transfer fees, and escrow fees
- Any seller closing costs
- Any other related selling costs
- The balance that’s left on your home mortgage
This should give you a fair idea of your net proceeds. You should receive your mortgage payoff amount from your lender before closing has been completed.
You may also want to contact your county assessor’s office or other respective local government office and your homeowners’ association to find out what your prorated amount of property taxes will be and any homeowners association dues that must be paid.
Most mortgages are spread out for longer periods of time, typically anywhere from ten to thirty years on average. It’s not uncommon for homeowners to sell their homes before the loan period has expired. Just make sure that you’re current on your mortgage payments.
You could sell your house while you’re behind, but it may be more difficult. There could be additional interest or other penalties, and it may take longer to pay off the loan balance. You may even end up paying money out of pocket after the house has been sold to make up the difference, based on what the home sold for and how much money is still owed to your lender. You may also consider refinancing if necessary or delaying the sale until you can afford to pay off the balance.
Pay attention to your loan balance and other current financial obligations. It’s a good idea to avoid any other large purchases (with the possible exception of buying another home) until the current loan has been paid in full.
Generally speaking, the less outstanding debt you have the better. Make every effort to pay off any credit card balances or other outstanding obligations so that you will look more favorable in lenders’ eyes when you apply for a mortgage loan for your next home.
Keep in mind that you’ll need enough money on hand to pay for moving expenses and finding a new place to live. Regular mortgage or rent payments and monthly utility bills will still need to be paid promptly. This is in addition to your existing expenses. You may want to keep a list of all active and expected costs between the time that you put your house up for sale and when you purchase or rent a new house. This can help you set a budget that you can monitor and track over time.
Take a few minutes to read your mortgage loan agreement. Familiarize yourself with the terms and conditions. You should also look to see if there are any penalties for paying off the mortgage ahead of time.
If you have any questions or concerns, you can discuss them with your mortgage lender and your real estate agent. They can help you understand what to expect. These discussions can also remove much of the stress and worry associated with selling a home before the full mortgage balance becomes due.
Monitoring your income and expenses can give you a realistic assessment of what your anticipated costs and revenue should be from the home sale. You’ll more than likely have enough money left over to pay off the mortgage balance and still have enough funds left over. That money can be put towards buying another home, car or other items, or it could be set aside for later. Whatever you decide to do, you can congratulate yourself for successfully selling your house. It’s time to close that chapter and start looking forward to the next phase of your busy life.
Contact Jackie Ruden Realty Team
Give us a call today at (435) 272-7710 to set up a time to discuss your current and future real estate goals in regards to buying a home or buying a property in trust. We look forward to working with you to make your goals a reality.