It’s not unusual for homeowners to take out a second mortgage on their houses when they need cash. Still, you may wonder whether it’s possible to sell a house with multiple mortgages or liens. The good news is that this is a common practice.
At Professional Home Buyers, we buy houses in Wichita, KS, even in unique situations. Here, we explain how to sell a house with a second mortgage.
What Is a Second Mortgage?
Understanding mortgages can help you navigate second loans and their role in home sales. A second mortgage is a loan taken against a home with an existing mortgage. Property owners may use it to access their home’s equity to pay the down payment on a new residence, pay for home improvements, or take care of personal business.
Can You Sell a Home With Two Mortgages?
What happens to a second mortgage when you sell your home? Does it go away? While you can certainly sell a home with a second mortgage, you are still responsible for paying off both loans.
Tips for Selling a House With a Second Mortgage
Learn how to sell a house with a second mortgage using these tips.
Determine Your Home’s Value
Whether you have a home equity loan or a home equity line of credit as your second mortgage, you should start your home-selling journey by assessing your home’s value. The sale price should cover the balances of your home loans.
Request Payoff Quotes From Both Lenders
Once you know your home’s value, contact both mortgage lenders to request written payoff quotes. Make this request at least a month before closing. The payoff statements will help determine if the home sale will cover all financial obligations.
Collect Documentation for the Second Mortgage
Selling a house involves a lot of paperwork. As you gather documents, don’t forget about paperwork related to your second mortgage.
Pay Off Both Mortgages With Sale Proceeds
If you’re wondering how to pay off a second mortgage when selling a house, know that your home sale proceeds should cover the remaining balances of both the primary and secondary mortgages, as well as selling expenses. Any remaining funds after meeting those financial obligations will go to you as a profit.
What Happens if the Sale Won’t Cover Both Mortgages?
If the sale of your home doesn’t cover both loans, you may benefit from something called a short sale. During a short sale, the property sells for less than the remaining mortgage balance, but all lenders must agree to a smaller payoff. You may need to negotiate a separate settlement or use your own funds to cover the remaining second mortgage balance if the lender doesn’t agree to a short sale.
Sell Your Home for Cash
If you’re thinking of selling your house before paying off the mortgage, we can help. Professional Home Buyers makes fair cash offers for properties throughout Wichita, KS. We offer quick closings and streamlined processes for your convenience.
If you still have questions about how to sell a house with a second mortgage, contact our team today at (316) 202-1628.