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Second mortgage: What if I sell my house along with it?


Second-mortgage--What-if-I-sell-my-house-along-with-it

You’ve got an exhaustive list of things to do from your real estate listing agent in order to make your house look all the more appealing and catchy to the potential buyers. Surely, you thought you’re done with them all, just when the agent hands out a report of her cost analysis on selling your property within present market value and your mortgage loan balance.

Reduced return on investment

The process to sell your home with a first and second mortgage is same as in the case of selling one with a first mortgage. However, there is an additional payment that you’ll have to make during the transaction. Otherwise, as far as both the closing agent and the title company is concerned, the entire transaction remains the same.

When your overall cost has been compared with that of your home’s selling price and the return on investment (ROI) is at break even, then you need to go through your first mortgage and that of your second mortgage promissory notes carefully so as to find out whether or not there are any kind of prepayment penalties included in them. Such extra cost have the potential to act as a spoilsport in the deal.

Overcome the equity hurdle

Basically, equity refers to the difference in value of your home and the amount of mortgage balance you owe. So, if you’ve got an appreciable amount of equity in your home, then selling it off along with both the first and second mortgage shouldn’t be a tough a task or pose any problem.

All the payments will then be deducted from the proceeds of the sale, adjusting different other costs in the process. Some of these costs may include taxes owed, real estate agent’s fees, loan balances, buyers expenses that are traditionally followed in your area, contribution to closing costs (if any) and probable prepayment penalties on your buyer’s behalf.

Negate the negative balance

Trying to sell your home when you owe more on your mortgage than what your home’s current market value is might be a cause for concern to you. In case, you took out the mortgage when the property’s value was at its peak and that you’re selling the same at a diminished rate, then you may not land a lucrative deal of your choice.

Hence, after subtracting all sorts of mortgage balances owed and costs from your home’s sale price, it is very likely for you to end up with a negative balance. As a result, to take the selling process to its rightful end and to rid the property of its liens, you’ll have to bear the brunt of the negative amount and pay for these costs out of your own pocket.

Be on your guard

In order to sell your home successfully, you first will have to find out its present value in the local housing market. It’ll be determined by weighing your home to various other similar properties in the same area that were sold in the last 6 - 12 months or so.

It is your real estate agent who’ll be able to provide you with a list of “sold search” from the Multiple Listing System (MLS) that match your home’s features. You’ll get to know of the costs borne by the sellers on behalf of their buyers and find out whether or not, there are any back taxes that are yet to be paid.

Get all the relevant mortgage payment statements and look for any sort of discrepancy or unfamiliar charges that were included in them. Dispute those charges at once and have them omitted.

After that, use your property’s market price, subtract all the expenses with it and see if its lower as compared to all the other costs. If its so, then you may call off the sale. This is because in such a deal, you won’t be able to recoup your investment and may even end up owing money at closing.

 

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