What Happens to a Loan When You Sell the House?

After you've sold your home, the title company takes care of the rest.

If you've decided to put your house up for sale, it's vital to think through the process from start to finish to determine what your next steps will be after finding a buyer. Understanding the process is particularly important in budgeting how much you stand to profit after paying the costs associated with the sale.

Calculating the Loan Balance

For the first five to seven years of the life of a mortgage, most homeowners are paying just for interest. Therefore, if you want to sell your home, but the sale price isn't significantly higher than what you paid for it, you may see little to no profit. Mortgages vary by institution, so it is vital to work with your real estate agent to understand the fees associated with the sale of your house and how much you will walk away with after a sale.

Sale Under Contract

Once you have accepted a buyer's offer and signed a contract, a title company will get involved. The title company provides the necessary paperwork for transferring the property from you to the seller. In addition, the title company requests information on your mortgage to prepare a statement of the account for the buyer.

Paying Off the Loan

After closing on the property, the title company will contact the buyer's lender in order to request that the buyer's funds be released. Once the title company receives the funds, the buyer's loan is applied to your mortgage.

Seller's Profit

Along with your mortgage, any fees associated with the sale of the property will also be paid through the funds from the buyer's loan. You will receive the remaining funds either electronically through your checking account or by check.

References

• Do Deals: What Happens To My Mortgage When I Sell My Home