market value of homes

How To Handle A Mortgage When Selling A House

Mortgages are one of the most important financial instruments in our society. Nearly every homeowner has a mortgage, and they depend on it to provide cash flow that pays their mortgage debt throughout the life of their loan. You can view here to learn more.

But what if you are faced with the dilemma of selling your house? As you look for a buyer, you may have some reluctance to sell without first ensuring that your buyers can secure financing for your sale. Here are tips to handle a mortgage when selling a house.

Loan to Value

The loan-to-value ratio is one of the most important factors when you are looking to sell your house. When you first get your mortgage, it will be a financing amount. This is how much you are obligated to pay back over the life of the loan. Then, over the term and at various points in the life of the loan, your interest rate will change.

This is called amortization. However, the amortization schedules are set at specific points in time and do not vary based on market conditions. The result is that you cannot change your rate before that scheduled date without affecting your loan-to-value ratio (LTV).

market value of homes

Avoid Discount Points

The Loan Estimate form that you get is one of your first papers to submit to the lender. Save it and take care of it as soon as you can. The Lender’s estimate shows you how much principle and interest are due, what your total payments will be, and the cost of closing costs. You should include all your significant costs when you show an accurate price to potential buyers or investors who are interested in purchasing your house.

If you do not include all of your costs, the buyer will have to pay a discount—the difference between what the Lender’s estimates says they will pay and the amount you charged the buyer. When this happens, the discounts are called “discount points.”

The buyers want to know what these points are and how much they are worth. If you take care of it in an organized manner, most lenders will accept your estimate and let the contract proceed.