There is a lot to consider when it comes to selling your home.
Most homeowners frequently ask us, “What happens when I sell my house?” Not only is this a great question, it is a very important one to ask too. If you are considering, or in the process of selling your home, you will want to understand what happens once you sell your home.
It shouldn’t come as a surprise to you that your home is worth a lot and probably one of the biggest investments you’ve ever made. For the average homeowner, their home represents the majority of their net worth. So, what actually happens when you sell your home? The answer is simple, but also depends on how you sold your home and how much you received for it.
1. You Sell and Pay Your Mortgage Off
If you manage to sell your home and receive enough to cover your mortgage, you will simply pay off your existing mortgage, any prepayment fees you incur, and keep the extra.
- You purchased your home for $500,000
- Your mortgage has $400,000 remaining
- You sell your home for $600,000.
- Without factoring in any fees, your gross profit on the sale is $200,000. You calculate this by subtracting the sale price by the remaining mortgage.
When you sell your home this way, you simply complete your previous mortgage. This makes it easier for you to apply for a new home as your previous mortgage will be paid off.
2. You Take Your Mortgage with You
Sometimes paying off your previous mortgage can be a bad thing. While this may sound crazy, hear us out.
If your previous mortgage has an advantageous interest rate, you may want to consider blending your new mortgage in with the old one.
In this scenario, you carry over your existing mortgage and settle on a new interest rate that is a blend between the old and new rate.
This option is a popular one in a market that has high interest rates. Houses are expensive and every additional percentage on your interest can add a lot of extra cost to your yearly mortgage payments.
3. You Pass Your Mortgage to the Buyer
Sometimes a buyer will want to assume your old mortgage, especially if it has an attractive interest rate.
Keep in mind, while this isn’t the most common option used when selling your home, it is still one that is available to you.
As a seller, this option can be attractive because it lets you get rid of your mortgage and it can help you avoid incurring nasty prepayment fees.
Mortgages Don't Have to Be Scary
Selling your home doesn’t have to be a scary process. If you have any questions about selling your home, what happens after you do, or how to deal with your current mortgage, feel free to contact HomeLife Cloverdale today. We have been helping families buy and sell homes in the Langley and Cloverdale real estate markets for many years and we are committed to simplifying the real estate process for you.