Selling a house with a mortgage: who pays the missing installments?

Selling a house with a mortgage

If, due to economic necessity or a desire to move, we have developed the will to sell our current home, on which we are paying a mortgage, we don’t have to worry, because it is allowed to do so. But how is it done? Generally choosing between three different ways:

pay off the loan before the deed

pay off the loan upon deed

pass the mortgage on to the buyer

So let’s analyze the options together to understand the advantages and disadvantages of each choice.

Pay off the loan before the deed of sale

The simplest way, but also the most unlikely, concerns the total extinction of the loan before carrying out the deed of sale. Obviously, in this case, we must have the missing capital available, this represents a real economic sacrifice that we often don’t want to or can’t make

Also because it is necessary to analyze a further aspect. In recent years, the real estate market has reached limits that were unimaginable until recently, and mortgage payments are often very high compared to the real value of the home. The cause of this discrepancy is due to the “collapse of the brick”, so we will find ourselves paying a huge amount for a house that is actually much less.

Pay off the loan upon deed

We will then be able to decide to pay off the mortgage, using the money we collect from the sale of the house. The correct term to define this operation is: early repayment of the loan at the same time as the deed.

At a notary, therefore, we can receive a cashier’s check made out to our bank, for an amount equal to the residual portion of our mortgage. Once the check in question has been paid, we will receive from the bank the receipt of successful extinction.

It must be emphasized that based on the year in which the mortgage was taken out, costs or penalties could be expected in the event of early repayment, so we must first make some checks.

Pass the mortgage on to the buyer

The procedure that has had the most success in the last period, however, is the assumption of the mortgage by the buyer. The situation is slightly more complex as the bank and the buyer have to agree.