Is the principal balance on a mortgage higher or lower then what is owed if you sell your home?
Home Mortgage
kyle s asked:
My mortgage company will only give me a payoff in wiriting and that takes 10 days. I just need to know if I sell now is the full principal balance owed or is the amount less?
Jon
My mortgage company will only give me a payoff in wiriting and that takes 10 days. I just need to know if I sell now is the full principal balance owed or is the amount less?
Jon
July 31st, 2009 at 9:13 am
Kathryn
You owe the the remaining balance.
The amount of your mortgage is not a function of what you can sell the house for.
August 3rd, 2009 at 2:11 pm
Christopher
It depends. If you have an open mortgage, your amount owing today will reduce slightly by the time a sale goes through, provided you keep making your payments.
However, if your have a closed type mortgage, there could be penalties involved in paying it off early. Those can amount to as much as 3 months payments. Nasty.
Ask the mortgage company if there is any penalty. If not, the current balance is close enough.
August 5th, 2009 at 8:58 pm
Judith
When you sell a home, the full principal balance must be paid. There are no discounts or reductions. I’ve never heard of such a thing.
Perhaps you’re thinking of a short sale. This is a situation where the home is going into foreclosure but to avoid that, the owner and lender agree to sell it for less than the loan balance. Lender’s have to be desperate to do that but it is done, especially now when foreclosed properties are everywhere and banks are taking a beating trying to get rid of them.
August 6th, 2009 at 1:35 pm
Terri
You need to figure 2 things: The physical balance that you owe on the home and the amount of interest you owe until the balance is paid. Most people forget that they are responsible for the daily interest on the balance that they owe. Depending on the size of the loan and the interest rate, you can figure between $10-$50 a day. This date starts from the last day you made a payment until the actual day the bank receives your check. So, when you ask for a payoff, tell them a date about 10 days after your date of sale. This assures that you pay enough to close the loan. If you pay too much, the bank will send it back the extra amount in a matter of weeks.