Home Sellers: What You Need to Know About Your Mortgage
September 2nd, 2015
September 2nd, 2015
Besides finding a terrific listing agent, packing up and staging your home, home sellers also need to be savvy when it comes to mortgage-related issues regarding their home sale. Here are some common FAQs that sellers may have.
Do I have to pay a mortgage prepayment penalty?
It depends. If you have a FHA loan, VA loan or USDA loan, then no, you won’t have to pay a prepayment penalty. For other types of loans, you may have a prepayment penalty. While prepayment penalties are not as common as they used to, some loans may still have them, especially if your loan was put in place before 2008.
A prepayment penalty is a written agreement between you and your lender that says if you prepay your mortgage before a specific time period – usually less than 5 years – then you must pay a specified penalty to the lender.
To determine if you have a prepayment penalty, you should review your mortgage note carefully to see if it outlines any prepayment penalty terms. Sometimes, the note may say you don’t have a prepayment penalty, while an addendum may say that you do. If you have any questions about a prepayment penalty, contact your lender.
How soon after I sell my home, will my mortgage be paid off?
When you sell your home, the buyer’s funds are used to pay off your existing mortgage loan. Depending on the state you live in, this payoff is handled by a title company or an attorney. The title agent and/or attorney receives the buyer’s money, pays off your existing mortgage within 1 to 2 days of closing, removes the lien on the title and transfers the title to the new owner. You will receive a final closing statement which confirms the payoff.
When should I get pre-approved to buy a new home?
First, you should calculate the estimated net proceeds from the sale of your current home. Talk to a tax advisor for assistance.
Next, call the mortgage specialists at Grandview Lending in Indianapolis at 317.255.0062. They can walk you through the steps to get pre-approved for a new mortgage loan. They will ask you a series of questions about your financial history, future plans and goals to better understand your needs in order to find you the right loan based on your unique situation. Provide them with the estimated net proceeds from the sale of your home. During the pre-approval process, you will also be required to supply them with pay stubs, bank account statements, tax returns and W-2 forms from the previous 2 years and other documents that show other sources of income. Grandview Lending’s mortgage specialists will work with the lender to acquire your pre-approval letter. Once you have your pre-approval, you’ll know exactly how much you can afford to pay for your new home, so you don’t waste your time looking at homes that are outside the price range you can afford.
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