Selling a House With a Mortgage: Setting Yourself Up for Success

Selling a house with a mortgage isn’t unusual. In fact, most homeowners still have a mortgage when they sell. The key is knowing how to navigate the process so you walk away with money in hand – without being blindsided by fees, delays, or worst-case scenarios where you owe money just to close.

Whether you’re selling a home in Charlotte or a condo in Columbus, this isn’t the time for  guesswork. . What follows is a straightforward breakdown of how to sell your house with a mortgage, step by step.

Step 1: Get your mortgage payoff statement

Before you call a real estate agent, call your lender. Ask for a mortgage payoff statement, which tells you exactly how much you’ll owe on closing day. This number includes your remaining loan balance plus any unpaid interest, and in some cases, early payment fees or administrative costs. This payoff amount is the baseline for all your other calculations.

Step 2: Estimate your net proceeds

Once you’ve got the payoff in hand, the next step is figuring out what’s left for you. From your expected sale price, subtract:

• The full mortgage payoff amount
• Real estate agent commissions
• Closing costs
• Any unpaid taxes, liens, or HOA fees
• Repair credits or buyer concessions
  

What’s left is your net proceeds—the money you’ll take home, if all goes well. If the number’s lower than expected, or if it dips into the red, you’ll need to decide whether to: hold off on selling, rent it out for now, or pursue a short sale, where the lender agrees to accept less than what you owe. 

Some homeowners also explore loan assumptions or modifications, depending on the type of loan and lender flexibility. A quick conversation with your lender can clarify your options.

Also, check whether your lender holds funds in escrow for taxes or insurance. If so, ask whether you’ll get a refund of any remaining escrow balance after the mortgage is paid off.

Step 3: Choose how you want to sell

You’ve got two routes: hire a listing agent or sell it yourself (FSBO—For Sale By Owner). 

If you go with an agent, you get market analysis, pricing strategy, professional photos, help with negotiations, and someone to chase down all the paperwork. You’ll pay a commission, but you’re also buying peace of mind.

Selling on your own means doing all of that yourself, and buyers’ agents may still expect their cut. FSBO can work if the market’s hot or if you already have a buyer, but be honest about whether you’re equipped to handle contracts, disclosures, and everything in between.

Step 4: Price with precision

If your equity’s thin, meaning you don’t have a big cushion between your mortgage and the market value, pricing becomes especially important. 

Overpricing the home can cause it to sit, which eats into your timeline and costs. Underpricing it could mean owing money at closing. Either way, guesswork is risky.

Have your agent run a Comparative Market Analysis (CMA), or do it yourself using recent sales of comparable homes in your area. Price to sell, but do your best to make sure it clears your debts and costs. If you’re too close for comfort, talk with your lender about options in case you fall short—they may allow a short payoff or consider hardship arrangements.

Step 5: List, show, and vet offers carefully

Once the house is priced and listed, the showings start. Clean up, stay flexible with scheduling, and respond quickly to buyer questions. When offers roll in, don’t focus only on price. Also consider:

• Whether the buyer’s paying cash or needs financing
• How solid their loan pre-approval is
• Whether they’re asking for closing cost help
• Their timeline and contingencies (inspection, appraisal, etc.)
• Whether they need to sell their own house first

If your pricing is tight, pay close attention to appraisal contingencies – a low appraisal can derail financing or force renegotiation. If you receive an offer with an appraisal gap clause (where the buyer agrees to cover any shortfall), that may be a safer bet than a higher offer without one.

Step 6: Wrap things up after the sale

Once the house is sold:

• Cancel autopayments to your mortgage
• Cancel homeowners insurance (after confirming the deal has recorded)
• Notify your utilities and update your address
• Store your closing documents in a safe place
• Check with your lender about a refund of escrow funds, if applicable

In many cases, homeowners who’ve lived in their home for at least two of the past five years may not owe capital gains tax on the profit from a sale – up to $250,000 for individuals and $500,000 for married couples filing jointly. However, every situation is different, so it’s best to consult a tax professional to understand how the rules apply to you.

Final thoughts on selling a house with a mortgage

Selling a home with a mortgage is about understanding what you owe, how much you’ll clear, and who’s involved in making it all happen. The process isn’t complicated, but it does reward preparation and clarity. The good news? With the right steps, you can sell smoothly and move on with money in your pocket.

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