What happens to a mortgage upon subdividing?
My question is in the subject heading, but here's the hypothetical:
Let's say I buy 5 acres for $500,000 using conventional mortgage financing. There's one house on the property. I decide to live in the house with 1 acre and subdivide the rest into 4 additional 1-acre parcels that I will sell for $50,000 each. Do I have to re-finance them as individual parcels before I can sell them? Or do I re-finance at closing each time a parcel sells? Or do I just keep the original mortgage until it is paid off, or the last parcel sells?
It seems like I would have to get my lender's approval of each sale, since the value of the underlying security would change each time a parcel is sold.