Why St. Louis Home Sellers Need to Understand Their Mortgage
Your mortgage is a major part of owning your home. When selling your home you will want to make sure everything with your mortgage is in order and that you fully understand what will happen to your mortgage once your home is sold. Before listing your home consider these five mortgage factors.
Pre-payment Penalty
If you purchased your home before 2008 you may have a pre-payment penalty included in your mortgage. This number can be very pricey depending on how much money you have left on your mortgage. Many mortgages that have a penalty policy will make you pay six months interest on what you have left on your mortgage. Make sure you check your paperwork thoroughly so you know from the start if you will have to pay a penalty.
Paying off Your Mortgage TImeline
An attorney or escrow will handle your mortgage payoff, depending on where you live. It will be paid off in one to two days and then you will get the net proceeds.
Net Proceeds
One of the most important aspects of selling your home is how much you will make in the end. You can calculate this amount by taking the sales price minus the selling costs minus the loan amount (if you are a married couple). If you are single you will need to take into consideration the 25% state and federal capital gains tax.
Getting Pre-Approved For a New Home
You will want to talk with a tax advisor to make sure your net proceeds calculation is correct. Once you have this number you can use it towards getting pre-approved for a new mortgage. Keep in mind that this is an estimate.
Buying Before Selling
If you do not want to sell your home before you buy a new home there are a few options to see if this is plausible for you. One is to see if your income can support owning both homes at the same time. The second option – which is only usually done in select markets where it is very likely that your home will sell quickly – allows a lender to exclude the debt of your current home when calculating what you are approved for in your new home.
When selling your current home in order to purchase a new one, it is important to understand what will happen with your mortgage. By being clear on timelines along with what to expect, you can go into this home selling process with more confidence.