If you’re thinking about selling your home in St. Louis—but still have a mortgage on it—you’re not alone. Just how does selling a home with a mortgage work? In fact, most homes sold today still carry an active mortgage. Whether you’ve been in your home for five years or fifteen, there’s a good chance you’ve built up equity—but also a lot of questions.
- Can I sell before my mortgage is paid off?
- How does the payoff process work?
- What if I owe more than my home is worth?
- Can I use my equity for a down payment on my next home?
This post will walk you through the key steps to selling your home while it still has a mortgage and help you understand the payoff process, your financial position, and what to expect at closing.
âś… Yes, You Can Sell a Home with a Mortgage
Let’s get one common misconception out of the way: You don’t need to pay off your mortgage before selling your home. When you sell, the proceeds from the sale are used to pay off your existing loan balance as part of the closing process.
The key is knowing your numbers ahead of time—so there are no surprises when offers start rolling in.
🧮 Step 1: Find Out Your Mortgage Payoff Amount
Your mortgage balance is not the same as your payoff amount. Lenders typically calculate a final payoff based on:
- Your remaining principal balance
- Daily interest accrual
- Any prepayment penalties or fees (rare, but worth checking)
👉 Call your loan servicer and ask for a mortgage payoff statement. This will be valid for a short window (usually 7–10 days), so you may need to request an updated amount later during the selling process.
📊 Step 2: Determine Your Home’s Market Value
Before you can figure out what you’ll walk away with, you need to know what your home is worth. You have a few options here:
- Ask a local Realtor (like me) for a Comparative Market Analysis (CMA)
- Review recent sales in your neighborhood
- Use online estimates (Zillow, Realtor.com) as a loose starting point—but not the final word
💡 Local real estate experience matters. If you’re in South County or Northern Jefferson County, I can give you an accurate market value based on nearby sales and current buyer demand. Outside this area, ask me I can probably help also.
đź’° Step 3: Estimate Your Net Proceeds
This is the part sellers are most curious about: how much money you’ll actually walk away with.
Here’s a simplified formula that is used in net sheet calculations:
Estimated Sale Price
- Mortgage Payoff
- Closing Costs (title fees, commissions, prorated taxes)
- Repairs or concessions (if any)
= Estimated Net Proceeds
For Example:
$200,000 - Estimated Sales Price
$50,000 - Mortgage Pay off
$12,000 - Closing cost (6% of $200,000)
$3,000 - Repairs and Concessions
= $135,000 - estimated net proceeds
In Missouri, sellers often pay around 6–8% in total closing costs (including commissions and title work). Every case is unique, so a personalized net sheet is your best bet.
🛠️ TIP: If you’re also buying a home, these proceeds can be rolled into your next purchase as a down payment.
🏦 Step 4: Coordinate the Sale with Your Mortgage Lender
You won’t need your lender’s permission to sell, but your title company or closing attorney will contact your lender to get the official payoff and ensure it’s paid at closing.
Here’s what happens:
- Buyer pays at closing
- Title company wires funds to your mortgage lender
- Remaining money (your equity) is sent to you via check or direct deposit
🧾 Bonus Tip: Request a confirmation letter from your lender showing the loan was paid in full. It’s a good record to have in your files.
⏳ What If You Still Have a Second Mortgage or HELOC?
Many homeowners also have:
- A second mortgage
- A home equity loan or line of credit (HELOC)
These balances also need to be paid off at closing. Your title company will handle both payoffs from the sale proceeds. It’s important to:
- Request payoff amounts from all lenders
- Make sure your equity covers both loans
📉 If your home has dropped in value and you owe more than it’s worth, talk with a Realtor ASAP. Options may include a short sale or renting until the market recovers.
🧠Selling Before Buying—or Buying Before Selling?
When selling a home with a mortgage, timing is everything.
If you’re buying another home, you have a few options:
- Sell first, then buy: Safest financially; gives you firm proceeds to work with.
- Buy first, then sell: Riskier unless you qualify for two mortgages or use a bridge loan.
- Concurrent closing: Coordinate sale and purchase to close on the same day (this is common with rightsizers).
🎯 Need to right-size your life? Whether you’re moving up to make room for a growing family, or downsizing into something easier to maintain, I help St. Louis area homeowners transition smoothly—with a strategy that fits both your timeline and your budget..
🔎 Special Situations to Watch For
1. Negative Equity (Underwater Mortgage)
If you owe more than your home is worth, you’ll need to bring cash to closing or request a short sale with lender approval.
2. Prepayment Penalties
Most modern loans don’t have these, but older ones might. Check your original loan documents or ask your lender.
3. FHA/VA Loans
You can sell a home with a government-backed loan just like a conventional one. Some buyers might even assume your FHA or VA loan if the rate is favorable—ask me how!
4. Tax Implications
Most homeowners don’t pay taxes on home sale profits under $250,000 (single) or $500,000 (married), but check with your CPA for your specific situation.
đź“Ą Download: Your Free Home Selling With a Mortgage Guide
This guide includes:
- A printable mortgage payoff checklist
- Net proceeds calculator
- What to watch for when selling before buying
- And more!
🧠Ready to Talk About Selling?
Selling a home with a mortgage doesn’t have to be stressful—but you do need a clear strategy and a Realtor who understands how to align timing, finances, and your goals.
📞 Let’s chat about your next move—click here to contact me
Whether you’re upsizing, downsizing, or just curious about your home’s value, I’m here to help make the transition smooth—and successful.
📦 Recommended Moving Supplies for a Stress-Free Move
- Heavy-duty moving boxes – assorted sizes
- Packing paper and bubble wrap combo kit
- Moving blankets for furniture protection
- Tool kit for disassembly & reassembly
🛒 I may earn a small commission from qualifying purchases at no extra cost to you—thanks for supporting local content!
