Selling a Home with More Than One Mortgage
Selling a home with two mortgages is very similar to selling a house with one. However, to make your sure you make your home sale a regular sale, as opposed to a short sale, your home must be worth more than the total of the mortgages. To do this, you need to create a strategy with your agent that will generate enough income to cover both liens (with hopefully enough left over that you turn a profit on the sale). While most second mortgages may be designed differently than a first mortgage, there is legally little difference between the two.
Difficulties in selling a home with multiple mortgages
When attempting to sell a home with multiple mortgages, there are a few things that you need to consider. The first is whether your home has decreased in value since you have purchased it. If it has, you might not be able to cover both mortgages with the sale of the home. In this case, you might want to reconsider moving until the home’s value has increased or you are able to pay off more of the mortgage.
If you must move, you need to be prepared to make up for the difference in the loan value and the sale price of the home. However, you will have to pay the rest out of pocket or sell your home by doing a short sale.
A second mortgage should not disrupt the sale of your home. When closing documents are prepared, the second mortgage payoff amount is simply factored into the final distribution of funds. Before putting your home up for sale, make sure that there is no penalty for prepaying your second mortgage. Some second mortgages come with additional fees should the mortgage be paid off during the first years of its existence.