What happens to your mortgage if you sell your home for less than you owe?
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What happens to your mortgage if you sell your home for less than you owe?
We would like to move into a bigger home. We live in a small condo that we paid a lot for. We will never get as much for it as we owe for our loan, but we have out grown it. We are not in a foreclosure situation because we are making the payments on time without a problem. If we sell our home for less than it is worth, can we add the balance of our mortgage onto the mortgage of a new home, or will we owe the bank the balance right then and there?
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Comment by linkus86
You will owe it “right then and there”.
The title to the property can’t pass to your buyer until all liens are cleared. A mortgage is a lien. Therefor you must bring the difference of the sales price and the mortgage to the closing table or the sale cannot proceed.
Comment by Realtoratheart
NO! You will have to bring the difference to the table at closing. That equity loss is yours not the lenders. You can certainly talk with them about doing a “short sale”, but most aren’t inclined to work with you on it. And it will impact your credit for buying something else anyway. Your stuck at the moment until the market heats back up.
Comment by khalilkyd
Obviously, you have to pay the balance.
Its elementary .
Comment by Marie
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Comment by Neil
You have to pay the balance at closing otherwise the buyer’s mortgage company won’t give them a mortgage. You could try to get loan modification on your existing loan. Consider calling HUD at (800) 569-4287 and take advantage of their free financial counseling services. A good site I used to get some help can be found at http://www.credit-hub.net/loan-modification where I entered some details about my current mortgage and the company got back to me multiple loan modification proposals.