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Equity can play a role in timing a home sale

On Behalf of | Dec 26, 2019 | Residential Real Estate

Those who own property in Delaware and throughout the country may sell their homes even if they owe money on their mortgages. Ideally, a homeowner will owe less on a home loan than his or her home is worth at the time of the sale. This is because the primary lender is the first to be paid when the sale closes. If there are any other home loans or lines of credit attached to the house, they will be paid off next.

Finally, any taxes, fees and commissions owed to a real estate agent or other parties are paid from the proceeds of a home sale. The seller gets to keep anything that is left over after all other financial obligations have been fulfilled. Usually, that money is used to make a down payment on a new home. Those who are trying to buy and sell a home at the same time are encouraged to sell their current property first.

Doing so makes it easier to have access to funds needed for a down payment or other closing costs. Of course, individuals who can afford to do so are allowed to carry a mortgage on two properties if they wish. Bridge loans may also be available to provide temporary liquidity to purchase a new home before selling the current one.

Those who are trying to sell residential real estate may want to calculate their potential profit or loss prior to doing so. This might help a person determine if selling is in his or her best interest. If a person can no longer afford a mortgage payment, a short sale may be a viable option. An attorney might be able to help a seller better understand the process of putting a home on the market.