Some types of mortgages can make it financially beneficial to sell your house. Others, however, don’t offer the same advantage and might even make the entire process more complex.
Does the home you want to sell have a fixed-rate mortgage? Read on as we share what you need to know about selling a house with a fixed-rate mortgage, highlighting how we can help you sell your house fast.
What Is a Fixed-Rate Mortgage?
Fixed-rate mortgages lock in your mortgage’s interest rate. This means that, regardless of market trends or fluctuations, your mortgage payments will remain the same throughout.
Sure, these types of mortgages don’t let you take advantage of the potential drops in interest rates. However, they free you from worrying about your mortgage payments going through the roof.
Selling a House With a Fixed-Rate Mortgage
Though it’s not mandatory, knowing all about mortgages can go a long way in helping you make the most out of your home’s sale. For instance, can you sell your home even if it has a fixed-rate mortgage?
The short answer is yes, selling a house with a fixed-rate mortgage is possible. This happens because the mortgage only locks in interest rates, not ownership.
However, while you can sell the home anytime, there are a few things you need to keep in mind.
Mortgage Payoff
The most important thing to consider when selling a house with a fixed-rate mortgage is that your lender might require you to use the sale proceeds to pay off the loan balance. You’ll then get to keep the funds that remain.
Prepayment Penalties
Some lenders will charge a prepayment penalty, penalizing homeowners who want to pay off a mortgage before the loan’s initially agreed-upon timeframe. This penalty could be between 3% and 5% of the total loan amount.
Thankfully, your real estate agent should help you determine if this prepayment penalty applies in your case. Knowing such details will help you estimate how much you’re likely to get after the sale.
Home Equity
Pay attention to your home’s equity as well. If its value is less than what you owe on the mortgage, you will need to bring extra cash to cover the closing costs. If doing so isn’t feasible, you do have other options you can consider.
For instance, the buyer could assume the fixed-rate mortgage and carry on paying it off. This could force you to sell your home at a decreased price, though.
The other alternative would be to transfer the mortgage and its terms to the new home you are purchasing.
Streamline the Sale With a Cash Sale
Are you interested in selling a house with a fixed-rate mortgage but don’t want to go through the possible complications? We here at The Red Door Guys can provide you with a quick way out by making a cash offer and buying your home as-is.
Our solutions are also ideal even when selling a house with a reverse mortgage. Call us today at (804) 395-7355 to learn more.
