Short answerYes. Most sellers still have a mortgage. The title company pays it off from the sale proceeds at closing. If you owe more than the sale will net after costs, you can bring cash to closing, ask the lender to approve a short sale, or wait and pay down the loan. Start with a payoff statement and a net estimate.
How the payoff works
- The title company orders a payoff statement from your lender.
- At closing, the payoff, fees, and costs come out of the proceeds.
- The lender releases its mortgage and the release is recorded.
If you owe more than you would net
| Option | What it means |
|---|---|
| Bring cash to closing | Cover the gap yourself. |
| Short sale | The lender agrees to accept less than owed. Slower, and lender approval is required. |
| Wait | Pay down the loan or let value rise. |
See what you keep when you sell.
This is general information, not legal or tax advice. Ask a real estate attorney or CPA about your situation.
Frequently asked questions
Do I need my lender's permission to sell?
Not for a normal sale that pays the loan in full. A short sale needs lender approval.
What about a home equity line?
It is paid off at closing too, from the same proceeds.
Keep reading
Want to know what a buyer's inspector may find before they do?
Book a free pre listing condition walk. I walk the house with you, point out what inspectors and FHA, VA, and USDA appraisers tend to flag, and give you planning ranges so you can decide what to fix, credit, price in, or disclose.
Book a condition walkOr call or text (812) 525-5489, or email john@yourpropertynegotiator.com.
The condition walk is a REALTOR® and contractor evaluation, not a home inspection, and it does not replace one. If you have already signed a listing agreement with another agent, please take these questions to your agent.
Written by John Long, REALTOR®, 1 Percent Lists Indiana Real Estate. Working contractor who has priced hundreds of home inspection repair requests. Former labor relations negotiator for a major manufacturer and U.S. Coast Guard veteran.
John Long, REALTOR® · 1 Percent Lists Indiana Real Estate · (812) 525-5489 · yourpropertynegotiator.com
This page is general information, not a substitute for a professional home inspection, and not legal, tax, insurance, or lending advice. Ask a real estate attorney about contracts and disclosure, a CPA about taxes, your lender about loan rules, and a licensed inspector or tradesperson about your house. Nothing here guarantees a sale price, net proceeds, repair cost, payment, timeline, appraisal, inspection result, or loan approval. Cost figures are planning estimates, not bids. I own Wardmark Property Operations LLC, a contracting company. You are always free to use any contractor you choose.