It’s natural for your home or first property to be your most precious possession, yet unforeseen circumstances sometimes necessitate selling it before the mortgage is paid off. Perhaps your family has grown and you’ve realised you need a bigger house, or maybe you’ve been offered a job in another state and have no choice but to move your whole family there.
A buyer may be found in the form of an investor who is considering real estate as an investment but would rather put their money into a completed house with a mortgage than one that is still being constructed. This is because he may have a much easier time obtaining financing for a purchase of a previously owned property (because it has an existing mortgage on it). Therefore, the prospect of being duped is much less. So can you sell a house with a mortgage?
However, as a consumer, you may have a few questions regardless of the reasons for the acquisition or sale of such assets. How realistic is it to try to sell or buy a property while still owing money on it? Should you settle the mortgage before listing the home for sale, or may the buyer assume responsibility for the remaining balance? Is there a plan B if the prospective buyer needs a loan to complete the transaction? These are common concerns brought up during discussions about purchasing a property with a mortgage. If you need a loan to buy or sell a house, keep reading for some helpful advice. The right options are there now.
The title document to the newly acquired property
This will ensure that he is the rightful owner of the property and may legally part with it. Buyers often ask for a copy of the previous deed when purchasing a property that has previously changed hands.
Registration and tax payment receipts for the property
If the property is owned jointly, a letter from each joint owner stating that they approve of the sale must be submitted.
One issue that has to be made clear at this time is that the sale of a home is not possible if the seller still owes money on a mortgage. In this case, the buyer would be responsible for paying off the seller’s mortgage. As of right now, this is one of the points that has to be made very clear. As it happens, you can choose one of two routes. He either comes up with the funds to pay off the outstanding amount or applies for a loan in the same amount. Both of them are worth exploring more, so let’s do that.
Conclusion
Property with an outstanding mortgage can be bought or sold; however, the seller should be aware that if the property is sold within three years of purchase, the seller will be subject to short term capital gains tax, which will reduce the seller’s return on investment.
