If I sell my house, I pay my second mortgage, at the same time?

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I’m looking to sell my house. Some years ago I did a home loan capital to cover unexpected expenses. Can I pay the mortgage, but still paid on a home loan for the rest of this term? I do not think I can sell the house for the combined payment of both loans.

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8 Comments
  1. Reply
    Mary B
    May 17, 2011 at 12:37 am

    No. The HELOC was given to you and secured by your home. There is NO WAY to sell your home and not pay off the second mortgage.

    End of story.

  2. Reply
    BAL
    May 17, 2011 at 12:57 am

    You better believe it. Your second mortgage undoubtedly has a “due on sale” provision that makes it due and payable on sale. It also is a lien on the property which would prevent a buyer from getting a loan to pay you for the house if the obligation is unpaid.

  3. Reply
    kattsmeow
    May 17, 2011 at 1:26 am

    When you sell your home you no longer have any collateral for your equity loan so YES, it HAS to be paid off at settlement. If you do not have enough money coming back to pay both loans then you will owe money at settlement that you must pay or the sale is invalid.

  4. Reply
    jbarelli
    May 17, 2011 at 1:55 am

    Yes, you’ll have to pay off all the loans you’ve taken out using the property as collateral.

    If you can’t, then you’ll need to work something out with the lender to get them to release their lien against the property, or you won’t be able to convey clear title, and nobody will be willing to buy it.

  5. Reply
    jkr17
    May 17, 2011 at 2:20 am

    You probably need to pay off the second mortgage, since it is secured by the house you want to sell. However, I would double check your paperwork. If you still have a copy of the note, you should be able to find this information to know for sure. In all likelhood, you will need to pay off this second mortgage – sorry to be the bearer of bad news!

  6. Reply
    DJ B
    May 17, 2011 at 3:12 am

    If your equity loan is using the house as collateral and you sell the home, then yes the lender would expect you to pay of the loan. So the answer is yes, you will be required to pay off any loans, liens etc. against the property, at closing. If you find you may not have enough to cover both loans, you should be prepared for one of them to file a 1099 form to the IRS for the balance due. Which in effect grosses up your income for the year. So I would contact the lenders ahead of this scenario and see what your options are. Don’t wait because it only makes you look bad and then they won’t work with you.

  7. Reply
    frankie b
    May 17, 2011 at 4:03 am

    NO. Both loans will be required to be paid off in order to have a closing with clear title.

  8. Reply
    DallasLoanGuy
    May 17, 2011 at 4:10 am

    The line of credit is secured by the property and their is a lien against that property.
    You will have to pay off the second.

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