Home Seller Mortgage Questions

Home Seller Mortgage Questions - The Tuttle Group

Selling a home can be almost as daunting as buying a new one, especially for a first-time seller. If you are a home seller, you likely have a ton of questions about the process, especially if you have a mortgage on the property. Let’s go through some commonly asked questions and how to work with your current lender.

Frequently Asked Home Seller Questions

What kind of closing costs should I expect?

When you go to closing, you are obligated to cover certain costs involved with the sale of the property. Now, in most cases, these costs will be deducted from the amount the buyer is paying. However, if the sale price is not enough to cover the mortgage lien and the closing costs you will need to cover the difference.

The closing costs will cover a myriad of things including:

  • Real estate commissions
  • Excise or gains taxes if applicable
  • Prorated costs such as property taxes, home owner association dues, and utilities
  • Other fees a seller sometimes pays such as inspections or appraisals

Your real estate agent can give you a fair estimate of these expenses before you put the property on the market. If the costs seem excessive, you can dispute them.

Does the current lender have a say in whether I can sell my home or not?

With rare exception, a mortgage lender cannot prevent you from selling your property. When you sell the property, the lender gets the money to cover the balance due on the mortgage lien. That is their main focus when you sell your home.

The most common exception to this rule is if you are doing a short sale, and that does require the lender’s permission.

Should I notify the lender before I put out a “For Sale” sign?

You are generally under no obligation to inform a lender of your intent to sell the property until you accept an offer. Then, you would need to notify them as they are a lien holder on the property.

How should I price my home if I have a mortgage lien on it?

You will need to sell the home for at least the amount of the mortgage balance plus the expense of closing costs. When pricing your home, you need to know the payoff amount. The lender can provide that information. Also, get a fair market appraisal done on the property to see how much it is worth on the market. From there, you and your real estate agent can determine the right price.

Will I have to pay a penalty if I pay off my mortgage early?

Most mortgage loans do not require a borrower to pay penalties for an early payoff. However, you should check your loan documentation to be sure. Your real estate agent or attorney can assist with this.


How does the mortgage lien get paid off once the sale is complete?

Title companies are the ones who handle the money part of a real estate transaction. They will receive the money from the buyer, pay off the mortgage and any other liens, remove the liens, and transfer the title to the buyer. Any monies left over go to you in the form of a check.

What else do I need to know when selling a home?

Read over every piece of paperwork before signing anything. You should make sure the payoff amount on the paperwork matches what the lender says. If it doesn’t, dispute it with your agent and the title company representative immediately.

Once the sale is complete, you have no further obligations, like property taxes or HOA dues.

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