Should I pay off my mortgage once or keep paying it monthly?

Question

If I sell a property and I still have mortgage left to pay that I took while purchasing the property is it better to pay off that mortgage once at all from the profit i'hv earned after selling or is it better keep paying it monthly like I used to pay when I owned the property?? any suggestions please?

Joe P. · Answer

@Jasraj Singh if you own a property that has a mortgage, you owe the remainder of the mortgage upon selling.

For example, if you own a home with 100,000 mortgage remaining balance, and you sell for 150,000, your transaction includes paying off liens on the property -- the mortgage company balance is resolved, and you get 50,000 (minus closing costs of course).

Another example is if you own a home a 100,000 mortgage remaining balance, and you sell for 80,000, your transaction includes paying off liens on the property -- the mortgage company balance is resolved, and you owe the remainder 20,000, and have to pay closing costs.

The mortgage payoff happens during the sale. So tell us the mortgage balance and the expected sale price, and we can ballpark what your take home (or extra payment) will be.

Kyle J. · Answer

@Jasraj Singh  If the mortgage is secured by the property that you're selling, it will be paid off/satisfied at closing.  They'll be no loan left for you to keep making payments on.

JD Martin · Answer

Not sure how you would still have a mortgage on a property you no longer own. Unless you are just using the term mortgage colloquially and you really mean just an unsecured loan. A mortgage is a lien on the property, and when you sold the property the lienholder demands payment. If you don't make enough from selling the property you have to bring a check with you to closing to satisfy the difference.

Are you talking about a HELOC you took on your own home? Or money you borrowed against another home to do a flip on some other house?

Are you talking about a HELOC you took on your own home? Or money you borrowed against another home to do a flip on some other house?

Joe Splitrock · Answer

@Jasraj Singh the closing company will take the proceeds from the sale and pay off your mortgage. One check goes to the mortgage company for pay off and the other check goes to you for profit. If you owe more money than the sales price, you need to bring money to closing or negotiate a short sale. A short sale is when the bank allows you to take an offer on the property for less than you owe on the mortgage.

You don't need to pay off the mortgage before selling the property.

Karen Margrave · Answer

@Jasraj Singh  Glad I could help. Real estate involves a lot of different subjects, and if you are unfamiliar with them, it can be confusing. If it's possible, I would suggest you take a class (probably can find online through a college) on Real Estate Principles and learn the basics. Once you understand how it all works, you will be able to move forward with more confidence and protect yourself. Good luck.

Jasraj Singh · Answer

thanks mate! that's what I was a little confused about!

appreciate it!

Karen Margrave · Answer

@Jasraj Singh Nobody will pay you what is owed on the mortgage without getting a deed in return. You have a several different concepts jumbled up. It sounds like a mix between a contract of sale, all inclusive deed of trust, and a cash sale. But the answer to any of them is no, you can't do that.

If you find a buyer to purchase for more than you owe, you pay off the mortgage, closing costs, etc and keep anything left over.

John Morris · Answer

If you sell the property and the property is the collateral for the loan, then it has to be paid off at closing. If you are referring to buying another property and using the proceeds from the sale of the first one to buy the new property outright or take a mortgage on it, then this would depend on other factors, such as your investment goals, financial situation, etc.  For buy and flip, you may want to use the cash, for buy and hold, you would most likely finance it.

Jasraj Singh · Answer

Absolutely! Thank you so much!

I'll definitely keep that in mind!

Karen Margrave · Answer

@Jasraj Singh Don't get discouraged. EVERYONE started somewhere. Start at the beginning and build your knowledge base. Just don't get ahead of yourself. Learn what you don't know (which is what you were trying to do on your post and that shows you're smart enough to know what you don't know) Don't get too far ahead of yourself, and you'll do great. Stay safe!

Should I pay off my mortgage once or keep paying it monthly?

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