Can You Sell a House With a Mortgage in Middletown, NY? How the Payoff Works

By Ammar Iqbal | Real Estate Salesperson, eXp Realty

One of the most common questions I hear from sellers is, "Can I sell my house if I still have a mortgage?" The answer is yes. Most homeowners in Middletown still owe something on their loan when they sell. Here is how the payoff works, step by step. For more about the area, see my Middletown, NY area guide.

The mortgage is paid off at closing

You do not need to pay off your loan before you list. When your home sells, the buyer's money comes in at closing, and your lender is paid first out of the sale proceeds. Whatever is left after the loan, closing costs and commission goes to you.

Who orders the payoff?

In New York, both sides usually have a real estate attorney. Your attorney (or the title company) asks your lender for a payoff statement. This shows the exact amount needed to close out the loan on a certain date. It is usually more than the balance on your monthly statement, because it includes interest up to the payoff day and sometimes small fees. Mortgage interest is paid in arrears, so your last payment does not cover the days before closing.

Know your numbers before you list

Before pricing your home, it helps to estimate your "net." Start with a realistic sale price, then subtract:

• Your loan payoff (and any home equity loan or line of credit)
• New York State transfer tax, which sellers normally pay
• Your attorney fee and other seller closing costs
• Commission and any credits you agree to give the buyer

If you want a clear starting point, I can prepare a free home value estimate so you can see what you might walk away with.

What happens after closing

Once the lender gets its money, it records a satisfaction of mortgage with the Orange County Clerk, which shows the loan is paid. If your monthly payment included an escrow account for taxes and insurance, any money left in that account is usually refunded to you a few weeks later. Keep making your normal payments until closing day so nothing goes late.

What if you owe more than the home is worth?

If your payoff is higher than what the home can sell for, you may need to bring money to closing or ask your lender about a short sale. This is less common today, but it is worth checking early, especially if you bought recently or have a second loan.

Selling and buying at the same time

Many Middletown sellers use the money from their payoff to buy the next home. If that is your plan, read should you buy or sell first in Orange County and my guide to selling a home in Middletown.

Ready to see your numbers?

You can browse Middletown homes for sale to see what is on the market now. When you are ready to talk about selling, reach out to me and I will walk you through your payoff, costs and timeline.