At HomeRiver Group, we make property ownership smarter and selling smoother. With national strength and hyper-local expertise, we’ve helped thousands of homeowners maximize value—whether upgrading, relocating, or downsizing. From strategic pricing to seamless closing coordination, we precisely handle every detail. Our full-service model blends technology with personalized guidance to deliver results that move with your goals. We’re more than managers—your real estate partners in progress.
You’ve built equity, but still carry a mortgage—can you sell your house? Absolutely. It’s more common than you might think, and the process is often simpler than expected with the proper support. From understanding your loan payoff amount to navigating closing logistics and timing a move, knowing your options is key. Whether upgrading or relocating, grasping how to sell with a mortgage puts you in control of your next move.
This blog will explore how selling a house with an existing mortgage works, what steps to take to calculate your payoff, how closing logistics are handled, and what alternative options exist if your mortgage balance is higher than your home’s current value.
Steps To Selling Your Home With An Existing Mortgage
Navigating the sale of a home with a mortgage might seem daunting, but by breaking it down into actionable steps, the process becomes manageable and efficient.
Here’s how to ensure a smooth transaction:
Start by obtaining your latest mortgage statement. This will tell you how much you still owe—your principal balance, outstanding interest, and applicable fees. Knowing your exact payoff amount is crucial as you plan your sale.
Get in touch with your mortgage lender early in the process. Inform them of your intention to sell the property. They’ll provide specific details about your loan payoff, any prepayment penalties, and the procedures for closing out your mortgage upon sale.
Subtract your remaining mortgage balance from your property’s current market value. This figure represents your equity in the home. If the sale price is higher than your mortgage balance, you'll walk away with a profit after closing costs. Conversely, if the home’s value has dropped, consult your lender about options in case of negative equity.
Partner with a real estate professional or use online valuation tools to determine a competitive listing price. Remember to factor in your mortgage payoff, selling expenses, and the local real estate climate as you set expectations. Also, double-check how to find your property lines to ensure you’re marketing your lot's complete and accurate boundary, especially if disputes or encroachments could affect buyer confidence.
Once you accept an offer, your closing agent or attorney will coordinate with your lender to obtain an official payoff statement. During the closing, your mortgage will be paid off directly from the sale proceeds before you receive any remaining funds.
At closing, the sales proceeds first satisfy your mortgage debt. Any excess after repayment, less agent commissions and closing costs, is yours to keep. This seamless transfer ensures you settle your obligations and can confidently move on to your next venture.
Understanding Closing Costs And Fees
When you decide to sell a house with a mortgage, closing costs and fees become a critical part of the equation. These expenses stack up during the final steps of your property sale. Understanding what you might be responsible for as a seller is essential, so nothing catches you off guard at the closing table.
Common Seller Closing Costs To Expect
Closing costs typically include a range of fees: agent commissions, title insurance, escrow fees, and potential outstanding property taxes. Agent commissions are often the most significant expense in this category, usually around 5–6% of the home’s final sale price, split between your agent and the buyer’s agent.
Mortgage Payoff And Related Fees
Remember the payoff amount for your existing mortgage. The balance due to your lender will be settled directly from the sale proceeds, and depending on your loan terms, it can include accrued interest or prepayment penalties.
Additional Expenses That May Arise
Additionally, sellers may need to cover costs for repairs negotiated during the inspection process, recording fees for transferring ownership, and in some cases, a portion of the buyer’s closing costs as an incentive to close the deal. Every real estate transaction is different, so it’s smart to review your loan documents and consult your settlement statement (often called the HUD-1 or Closing Disclosure) for a detailed breakdown of all the charges involved.
What Happens To Your Mortgage When You Sell
When you decide to sell a house with a mortgage, the looming question is: What actually happens to the remaining loan balance? The answer is straightforward—when your home is sold, the outstanding mortgage balance must be paid off in its entirety. This typically happens directly from the proceeds of the sale at closing.
How The Mortgage Is Settled At Closing
Here’s how it works: once you have a buyer and are ready to close, the selling price goes first toward paying off your mortgage lender. A payoff statement from your lender will outline exactly how much is owed, including any interest or prepayment penalties up to the day of closing. The closing agent manages this transaction, ensuring the lender gets paid and the property’s title is cleared of the mortgage lien. You will receive the remaining proceeds (if any) after your mortgage is satisfied.
What If You Have Equity Or A Shortfall?
You'll pocket the difference if your sale price exceeds your outstanding balance, including closing costs and fees. However, if you owe more than your house sells for, you’ll need to cover that shortfall to complete the sale—a scenario known as a short sale, which usually requires lender approval.
Buying A New Home Before Selling Your Current One
Timing is everything when navigating real estate transactions, especially if you’re considering buying a new home before your current one sells. This strategy is common, but it comes with opportunities and challenges that you must consider carefully.
Assessing Your Financial Readiness
First, assess your financial readiness. Can you qualify for a new mortgage while still carrying the existing one? Lenders will scrutinize your debt-to-income ratio, factoring in both mortgage payments. Unless your finances are exceptionally robust, you may find it challenging to secure favorable loan terms or approval.
Bridge Loans And HELOCs As Financing Tools
Bridge loans and home equity lines of credit (HELOCs) are popular solutions in these scenarios. A bridge loan offers short-term financing to cover your down payment on the new home while you wait for your current property to sell. Meanwhile, a HELOC lets you borrow against your home’s equity, but remember, both come with risks, especially if your home takes longer than expected to sell.
Using Contingency Offers To Your Advantage
Contingency offers are another strategy. You can offer a new home contingent on selling your current one, providing a safety net if your plans don’t unfold as quickly as you hope. However, sellers may hesitate to accept a contingency offer in a competitive market, so be prepared to negotiate creatively or have a backup plan.
Watching Market Conditions Closely
Finally, consider how market conditions might shift during this process. Rising interest rates, changes in local demand, or even minor fluctuations in your neighborhood’s property values can impact your buying power and ability to sell quickly. For some, renting out a mortgaged home instead of selling may offer a practical interim solution—especially if market timing isn’t on your side or you're looking to generate rental income while waiting for a better selling opportunity. Careful planning and a realistic understanding of your timeline will help you make informed decisions.
Tips For A Smooth Sale With An Outstanding Mortgage
Navigating the sale of a home while you still owe on your mortgage doesn’t have to be overwhelming. With the right strategies and preparation, you can ensure a seamless transaction that protects your interests and minimizes stress.
Here are essential tips to help guide you through the process:
Contact Your Lender Early: Initiate a conversation with your mortgage lender when you decide to sell. Request a payoff statement to know exactly how much you owe, including any applicable fees or interest.
Understand Your Payoff Amount: The balance shown on your last mortgage statement isn’t necessarily your full payoff amount. Make sure you have an accurate figure to avoid surprises at closing.
Work With A Knowledgeable Real Estate Agent: An experienced agent can help you navigate contingencies, coordinate with your lender, and market your property effectively, helping you achieve the best possible terms.
Price Your Home Strategically: Set a listing price that covers your outstanding mortgage and leaves room for closing costs, commissions, and potential negotiations — all while attracting buyers.
Prepare For Closing Logistics: Be ready to provide your payoff statement to the title company or closing attorney. Confirm that all necessary paperwork is in place to ensure your mortgage is paid in full at closing.
Disclose Mortgage Status To Potential Buyers: Transparency builds trust. Letting buyers know there’s an outstanding mortgage and that you’re managing the process responsibly can keep the transaction moving smoothly.
Plan Your Next Move Early: Whether upgrading, downsizing, or moving out of state, line up your next housing option in advance, especially if you’ll need the proceeds from the sale to fund your next purchase.
Increase water pressure before listing if it’s currently low, as sluggish water flow can raise red flags during showings or inspections. It’s a quick fix that enhances perceived value and ensures your home makes a strong impression. By staying organized, communicating clearly, and leveraging the right expertise, you can sell your house with a mortgage and move forward with confidence.
Final Thoughts
Navigating the process of selling a house with a mortgage doesn't need to feel overwhelming. As a current homeowner, it’s natural to wonder: Can you sell a house with a mortgage? The answer is yes, and thousands of people do it every day. The key lies in understanding your payoff amount, working closely with your lender, and ensuring all required steps are completed so the transaction goes smoothly.
At HomeRiver Group, we’ve seen firsthand how staying organized and partnering with experienced professionals can make all the difference. Our approach blends industry-leading insight with local market knowledge, ensuring you’re supported at every step.
If you have questions or need guidance as you consider your next real estate move, HomeRiver Group is here to help.
Read also:
Sell My House Fast Atlanta: Strategies That Work In Any Market
How To Sell A House Fast: Proven Tips To Close Quickly And Profitably
Rental Property Depreciation: What It Is And How It Can Save You Money
Frequently Asked Questions About Can You Sell A House With A Mortgage
Can you sell a house with a mortgage?
Yes, you can sell a house with a mortgage. The process is simple—when you sell, the proceeds from the sale are typically used to pay off your remaining mortgage balance. Any funds left after satisfying the mortgage are yours.
How does selling a house with a mortgage affect my credit?
Selling your house and paying the mortgage in full doesn’t negatively impact your credit. Fulfilling your loan as agreed can even improve your credit score by lowering your overall debt. Missed payments or short sales, however, can harm your credit profile.
Can I transfer my mortgage to the buyer?
Most mortgages are not assumable, meaning you cannot transfer your existing mortgage to the buyer. Most buyers will obtain financing, and your loan will be paid off at closing. Rare exceptions exist, but your lender must approve them.
What is a mortgage payoff statement?
A mortgage payoff statement is an official document from your lender outlining the amount required to pay off your mortgage as of a specified date, including principal, interest, and any applicable fees. This statement is crucial to ensure all debts are settled at closing.
Do I need to pay off my mortgage before selling?
You do not need to pay off your mortgage before selling your home. When the transaction closes, your mortgage will be paid off using the sale proceeds. If your home sells for more than what you owe, the remaining balance is yours.
How do I get a mortgage payoff statement?
Contact your mortgage lender or servicer and request a payoff statement. Provide your loan details and the expected closing date. Depending on your lender's processes, the statement will be delivered by mail, email, or online.
