Selling A Home While Still Having A Mortgage

Selling your home while you still owe money on the mortgage. How does the process work, how does the loan gets paid off during closing, and other things lookout for during the closing process.

Selling a home with a mortgage is no big deal as long as your home is worth more than your mortgage. This is where title and escrow companies come in. Real Estate Agents help clients buy or sell their home and the title company handles holding and disbursing funds from escrow accounts and issuing a title insurance policy covering ownership of the property.

After a contract is signed between the buyer and seller, the contract is delivered to the Title Company of choice. Most buyers obtain title insurance on their new property and it is traditional for the seller to pay for the buyers title insurance. That tradition also means that the seller gets to pick the Title Company, although they all provide the same service and most of their fees are regulated by the state so their costs are all about the same within a few hundred dollars.

Most real estate contracts include escrow funds like earnest money and an option fee. The Tile company collects and holds these funds and disburses them according to the contract. Issuing Title Insurance and disbursing funds according to a contract are the primary functions of the Title Company. When the contract approaches the closing date, they will receive funds form the buyer or the buyers lender. They will then use those funds to payoff the sellers mortgage or deliver cash to the seller of there is no mortgage to payoff.

Since the Title Company is providing Title Insurance to the new owner guaranteeing ownership free of any liens and incumbrances, the Title Company will carefully make sure that the sellers mortgage is paid off with the funds collected from the buyer and that any other debts are paid, like liens, HOA transfer fees, etc.

The Title Policy issued to the buyer from the Title Company is the new owners insurance policy that the property is free and clear and that any old mortgages or liens have been paid off. If it is discovered later that a mistake was made, the Title Insurance Policy will cover the new owners cost or obtaining a clear title to the property.


Whether you choose a resale home or a new construction home, buying a house is an exciting investment! Make sure you consider the options to make the best choice for you so that your new house becomes a great home. To help you consider all of the things that you should examine before buying a home, contact ROCK Properties Realty and we’ll help you make sure that your home buying experience becomes a wonderful experience.

Each and every day ROCK Properties Realty strives to create confident buyers and delighted sellers, and to offer world class service anchored by our experience and our unrelenting pursuit of excellence. Our fresh and responsive approach to real estate enables our clients to enjoy a higher level of customer service through talented agents, team-based systems, and cutting edge technology.

Leave a Reply