How do you sell a house that has 2 mortgages on it??

Question

Wayne Brooks · Answer

It’s the same as having one mtg.....you sell the house, the proceeds pay off the mtg(s), owner gets to keep what’s left over.

Ryan Thomson · Answer

This is a simple one. At closing, the title company or closing attorney handles all payoffs automatically. Both mortgages get paid from the sale proceeds before anyone sees a dime.

The process works like this: the buyer's funds come in, title pulls the payoff amounts from both lenders (usually ordered 2-3 weeks before closing), and both loans get wired out on closing day. Your fiancé and her brother only receive a check for whatever is left after both payoffs, closing costs, commissions, and any other liens.

One thing to watch: if the property is underwater on either loan (or both combined), you'd need to bring cash to close or negotiate a short sale. But if there's equity above both loan balances, the math is straightforward.

Get a net sheet from your agent or title company before you list. It'll show you exactly what walks out after both payoffs. No surprises at the closing table that way.

Vince Bartolini · Answer

Your fiance and her brother have a few straightforward paths depending on how fast they want to move and the condition of the home. Assuming the $60,000 balance across the two mortgages is accurate, a traditional open-market listing with a real estate agent is likely their best financial option, as selling within a $170,000 to $180,000 price range would easily clear the liens and leave them with a solid equity split after closing costs and taxes. Alternatively, if the property requires significant repairs or they want a faster, guaranteed closing without dealing with showings, they can sell it "as-is" to a local cash investor or wholesaler, though that will yield a lower net return. A third option is for one sibling to buy out the other's share via a cash payout or a refinance loan if one of them wants to keep the property as a rental—which could bring in around $1,300 a month—or live in it. Whichever route they choose, they will first need to ensure the estate's title is properly cleared through the North Carolina probate process or small estate administration so both heirs can legally sign the deed over at closing.

Account Closed · Answer

sounds like you can go through probate and each party can net about $25,000 each If you owe $60 and arv is $170 providing closing costs and whatever repairs you need are not much over $10,000

Andrew Bourgeois · Answer

When you say, 'left the house to her and her brother. . ' was this via a will, and was the house then deeded to both of their names? Reason I ask is there is a process by which they need to go through probate and identify any and all heirs if there was no will. Also, do you know if they have any of the info for, or tried to contact, either of the mortgage handling companies. Some mortgage handling companies are also registered debt collectors in the state of NC and can be frustrating when trying to get the payoff amounts when you try to sell. They'll say they can't give the heirs any information because they are not the individuals listed on the loan docs. There are consumer protection laws in place which says they do have to release this information to a Trustee or the heirs, but they will play dumb so they can rack up the late charges prior to giving you the payoff amounts. Even if they decide to keep it and rent it out, they need to verify the mortgage company will tell them how to transfer the docs and mailing address, along with allowing them to continue to pay or assume any finances.

Reese Davis · Answer

Thanks guys...so basically it sounds like she's better off keeping it.

Eric Weireter · Answer

Hi @Reese Davis - In most situations, having a second mortgage will not cause problems when you sell your home. It's really no different than selling a property with only one mortgage. At closing, the attorney will pay off both mortgages, and cut your fiance and her brother a check for whatever is left over.

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From a legal perspective, any mortgage recorded after another loan is a second mortgage. However, lenders construct second mortgages as either home equity lines-of-credit (HELOCs) or shorter term, higher interest rate, full disbursement mortgages for homes.

When selling a home, a second mortgage, regardless of the homeowner's use of the funds, reduces the seller's cash received at the closing of the sale. A second mortgage, however, should not prevent or disrupt the sale. When the title company, escrow agent or attorney prepares the closing documents, they simply factor in the second mortgage payoff amount into the final distribution of funds to the seller.

A second mortgage should have little or no effect on a homeowner's ability to sell her home. While the effects on buyers are nonexistent, sellers must pay off second mortgages just as they must pay off first mortgages. Sellers must deliver their property free of encumbrances, including any outstanding loan balances, to qualified buyers. The attorney must collect the first and second mortgage payoff amounts and ensure that the liens are removed from the sold property.

As sellers, you must consider two potential issues when selling a home with a second mortgage. First, you should reexamine your second mortgage loan terms to learn if there is a prepayment penalty associated with your note. Second, be sure your home's value is sufficient to pay off both the first and second mortgages (which you eluded to in your original post).

Stephen G. Wolff · Answer

We need to know the disposition of the property and mortgage. Has the property been titled in the new owners name? Did they assume the mortgages?

If they hold title, contact a local real estate professional and list the property for sale. When the sale closes the title company will satisfy the mortgages and disburse the proceeds. Make sure someone is paying the mortgage(s).

How do you sell a house that has 2 mortgages on it??

How do you sell a house that has 2 mortgages on it??

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