What Happens To My Mortgage If I Sell My House Before It’s Paid Off?

Jan 23, 2023

As a new homeowner, there are many questions you may have about the buying and selling process. One of the main questions we get asked is “What happens to my mortgage if I sell my house before it’s paid off?” We will do our best to answer this question for you, as a new homeowner, or someone who is just beginning their house hunting journey.

There is no such thing as a bad question.

First of all, it’s important to know that you are not alone when asking these questions. Many first time home buyers and sellers have not been adequately taught about the home buying/selling process in general. At Homes Warsaw, we do our best to educate our clients about the process before they begin looking for a home.

We would love to answer any questions you may have about the home buying or selling experience and help you find your dream house!

Selling a house with an outstanding mortgage is very common.

Most mortgage terms are 15 or 30 years so people tend to move before their term ends. Recent studies have found that the average length of home ownership is 8 years, which is under the 15 year mortgage term. What that means is most people will still have an unpaid mortgage when they sell their home. So what happens to the mortgage? Let us explain.

Mortgage lender is paid off.

Whenever you sell your home to buy another home, you have to pay back your mortgage lender whatever is still owed on the mortgage. This all happens at the time of closing. This excerpt from Bankrate.com’s article, Selling a home with a mortgage, helps explain.

When you close on the sale, you’ll use the proceeds to pay off your mortgage lender and any outstanding fees or closing costs. A representative of the lender will be at the closing to collect the money due to them. Whatever is left over after that is your profit — that’s the money you get to keep, aka the net proceeds. For example, if you sell for $300,000 and owe $150,000 to pay off the mortgage, plus $20,000 in closing costs, your profit is $130,000.


Usually when selling your home, you are buying another one at the same time. Since you will most likely need the money from selling your current home to buy the new one, your offer will be contingent. It does weaken your offer but is very common when it comes to the world of home buying and selling.

It’s important to use a realtor.

If you want to simplify your home selling process and make sure everything is done correctly, it’s crucial to use a realtor. There are endless benefits of using a realtor when selling your home, as outlined in this article.

Are you ready to sell your house?

We would love to help you navigate this exciting process! Please call us if you have any questions regarding any part of the home buying or selling journey. Our phone number is 574-527-1700 and our email is Kim@homeswarsaw.com or you can send us a message on our contact page. We can’t wait to hear from you!

Ready to buy or sell?

Our team is ready to to help you on this journey. Please contact us to start the process of home buying or selling!