Asked by: Silva Preisendorferreal estate real estate buying and selling
What happens if your house sells for less than you owe?
Last Updated: 26th March, 2020
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Considering this, can you sell a house if you still owe on it?
If you still owe $430,000 on your mortgage but you elect to sell the property now, you will still have $30,000 remaining on the mortgage that you will need to pay off. Negative equity can be caused by a number of factors, including: Falling house prices.
Subsequently, question is, what happens to your mortgage when you sell your house and buy another? When you sell your home, the buyer's funds pay your mortgage lender and cover transaction costs. The remaining amount becomes your profit. That money can be used for anything, but many buyers use it as a down payment for their new home. Your loan is repaid to your mortgage lender.
Simply so, can you sell a house with negative equity?
Selling your home when it's in negative equity will break your mortgage terms, will be expensive and should only be an option if you're in severe financial trouble. You will need your mortgage lender's permission to sell the property if you know you won't get enough from the sale to pay back what you owe.
What happens if your house goes into negative equity?
Normally if you move house, you use the money you get for your current property to repay the mortgage and act as a deposit for the next property. But that's not possible if you're in negative equity - you'll still owe some money on the original mortgage, and won't have any funds from the sale to use as a deposit.