Can You Sell Your House With a HELOC?

People ask us a lot of questions about their mortgages when selling their properties. Many ask, “Can you sell a house with a HELOC?” The quick answer is “Yes,” and in this post, we’ll explain what happens when you sell your house in Cincinnati under these circumstances. 

Understanding the Lien on Your Property

First of all, you need to understand the different types of loans available and the conditions attached. A HELOC is essentially a secondary mortgage. 

Regardless of loan type, the lender has a legal claim to your property until you repay what you owe. If you default on your loan, your property acts as collateral. 

This means that you must clear the lien before you can transfer ownership to the new buyer. That means that you must pay both the primary mortgage and HELOC before you see any money. 

Mortgage Payoff Amount and Outstanding Loan Balance

You should always check the loan payoff amount because it might be a little more than the actual balance. This is because interest accrues until the closing date. You can ask your lender for a ballpark figure. 

Using Home Sale Proceeds To Pay Off Debt

When can you sell a house with a HELOC? You can sell your home when the proceeds will pay off both loans. That leaves you free and clear to claim any excess. 

If there’s a shortfall, you’ll need the lender’s approval first, and you will still be liable for the balance. Some lenders will allow this option if you’re facing financial difficulties and the only other option is foreclosure. But it’s best to discuss this directly with them. 

Closing Costs and Final Settlement

You also have to work out what the closing costs will be. These can include agent commissions, title fees, taxes, and other transaction expenses. These come off after the loan payoffs and before you get your money. They can be more than you’d expect, so it’s a good idea to discuss these with your estate agent up front. 

What Sellers Should Keep In Mind

Selling a home with a HELOC is not unusual, but you need to keep an eye on the details. You’ll want to make sure that you know what all the closing balances are, as well as the closing costs. In an ideal situation, you should be left with enough equity to cover everything. 

Once you’ve done this research, you can relax. Your closing agent will typically handle the technical steps from there on, but you should review the numbers early and ask for updated payoff figures as the closing date approaches.

How The Kind Home Buyer Recently Helped a Cincinnati Homeowner Sell With a HELOC 

At The Kind Home Buyer, we recently worked with a homeowner in the Cincinnati area who had taken out a HELOC on their property. The loan had a variable interest rate, and over time the rate increased significantly, causing their monthly payment to become unaffordable.  

They had already maxed out the HELOC, which meant they did not have any remaining funds to make repairs or put money down on a new home. At the same time, the property needed work, and without those repairs it would have been difficult to sell on the traditional market or qualify for buyer financing. The situation was getting close to foreclosure, and they needed a solution quickly.  

We stepped in and made a fair as-is cash offer so they could sell the property without making any repairs or putting in additional money. We also gave them some time after closing to move out, which helped ease the transition.  

By selling the property, they were able to avoid falling further behind on payments and eliminate the burden of the high interest rate. They were able to move forward without losing the house to foreclosure and without the stress of trying to fix and list the property. They were extremely relieved to be out of a situation where the payments kept increasing and they no longer had any financial flexibility.

If you’re dealing with a similar situation, we can provide a solution without requiring repairs.

Moving Forward With Confidence

Can you sell a house with a HELOC? This won’t block a home sale as long as there’s enough equity in the property. It just makes the financial process a little more involved. You can make the right decision by checking how much you should get before listing your property. 

Contact The Kind Home Buyer at 513-951-8863 to learn how to do things the easy way or find out other information, like what tax to pay when selling.