Can You Sell Your House Before Paying Off The Mortgage In WI?

Like many Wisconsin residents, you might be curious about what happens to your home loan when you sell your Wisconsin house. Typically selling a property can be quite the process that includes making repairs, deciding on a selling strategy, cleaning, staging, and then packing up and moving out. The biggest struggle you will face is figuring out ways to sell your house fast, which may distract you from finding out if you can sell a Wisconsin home before paying off your mortgage. This article will cover some helpful information and answer common questions about selling a house before paying off the mortgage in Wisconsin and what steps to take to get started.

How To Sell Your House Before Paying Off The Mortgage

mortgage note in Wisconsin

Selling a House With a Mortgage in Wisconsin

The first question to answer is if you can sell a house with a mortgage in Wisconsin. And the good news is, you can! A lot of people sell houses with a mortgage all over Wisconsin. Your home loan does not have to be paid off first before you can sell your property. Selling a house with a mortgage is actually common; most people sell their homes with a mortgage, and it usually isn’t a problem. 

Although you have agreed to a loan term of either 15 to 30 years, that does not mean that you are obligated to live there that long. Life happens; things change. Within 15 to 30 years, you may need to relocate, take a job in another state, or decide to retire and live with your family. So you can most certainly sell your property before paying off your mortgage.

How Your Mortgage Works

Maybe it’s been a little while since you purchased your home and applied for a mortgage and would like a refresher on how your mortgage works. When applying for a mortgage, the lender determines how much you would qualify for and loans you a certain amount of money to buy a house. In turn, you commit to paying the loan back- with interest- over a term of 15 or 30 years. Each month the sum of the loan builds interest. In the beginning, you will pay more towards interest on the loan than the premium (the home price). Every year the loan is paid, a larger sum of your payment will go towards the actual home (the premium). 

What Does Your Monthly Payment Include?

Every month you make a mortgage payment, you are actually paying a few things in your monthly withdrawal. Firstly the payment you make is a predetermined amount your lender establishes. The loan amount usually covers four things:

  • Principle

The principle is the initial loan amount you borrowed. For example, if you borrowed $350,000 to purchase a house and pay off $10,000, your principal balance would be $340,000. To determine how much you owe in principle, check your monthly statement. 

Part of each monthly payment on your mortgage will automatically be put towards paying your principal. However, you can pay extra towards the principal every month, which is smart to reduce the total amount owed and get charged less in interest. 

  • Interest

The amount you pay in interest is based on your mortgage principal and interest rate. When making your monthly payment, part of what you pay goes directly to paying interest to the lender/bank. As the loan ages, you will be charged less in interest because the principal amount is decreasing. 

  • Taxes 

Part of your mortgage also includes property taxes. Each month an estimated amount is put aside to pay Wisconsin property taxes. The amount is put in an escrow account to be paid when taxes are due. Sometimes this amount can change, causing you to owe more or less. 

  • Insurance 

Usually, your mortgage includes paying for homeowners insurance, so a specific amount will be dedicated to paying that every month. 

Figure Out How Much You Still Need To Pay

Now that you understand how your mortgage works and what your loan payments consist of, you will need to figure out how much you still need to pay. This is when a call down to your lender would be helpful to get a current mortgage payoff amount. The amount quoted to you by the lender will be valid for 10 to 30 days before additional interest is added and changes the amount owed. Figuring out how much you still owe is significant to you, determining what your listing price should be when selling your home. 

The next thing to do is a title search. Your mortgage lender may recommend a title agent, or you will need to find one on your own. The title agent or title company will be the ones to do a title search to determine if there are any issues like liens against your residence.

Liens are legal claims against a property owner’s house to satisfy debts and obligations.

Running a title search will verify you don’t have any liens against your home and that you don’t owe anyone any money. If you do have a lien against your property, it will be important to clear that up and pay it off before selling your home. While doing the search, your title agent may ask you for the payoff amount and account number of your home loan.

This would also be an excellent time to look over your mortgage agreement for any due-on-sale clauses. A due-on-sale clause protects the lender by requiring the homeowner to pay their home loan in full after selling their property or transferring the deed to someone else. The lender will want to confirm that your mortgage will be paid in full before anyone else moves into your home; besides that, their involvement in the selling process is limited. They could ask for some info regarding the buyer’s mortgage lender, but under no circumstances are they to tell you who you can or cannot sell your Wisconsin home to. As long as the future homeowner can get pre-approved for a home loan to purchase the house, there shouldn’t be any issues.

The Selling Process

When it comes to selling your Wisconsin home and paying off your mortgage, the process isn’t as simple as handing over a check to your lender. Figuring out a selling strategy will be crucial to the success of your home sale. Every month your house sits on the market is another month you have to pay your mortgage. Depending on your financial situation, this may become hard to manage over time. Or maybe you found another house you’d like to buy, so you went ahead and put an offer on it. Then selling your home becomes critical so you don’t end up paying for two mortgages instead of just one. Figuring out a selling strategy shouldn’t be complicated; it’s just important to find one that meets your needs, which is to sell your house fast.

Here is what the selling process should look like:

Figuring Out A Selling Strategy 

The first thing you should do is figure out how you’re going to sell the house. Usually, people hire a local real estate agent, sell by owner, or sell to an iBuyer. All three have advantages and disadvantages to consider. Keep in mind when deciding which strategy is best for you to look into the true cost of selling your Wisconsin home.

Each selling strategy has either fees, agent commissions, service charges, repair costs, and closing costs associated with them. Those can amount to thousands of dollars you will have to pay and eat into the amount you can use to pay off your mortgage.

Some of the selling strategies might include decluttering your home and staging it for prospective buyers. (Selling with a realtor and selling by owner).

Selling by-owner will require you to hire a photographer to take pictures for your online listing. 

Working with a realtor or an iBuyer will require less effort than selling by-owner but will cost the most. Agents commission are typically 5-6% of the sale price, and iBuyer’s have been known to charge 6.7% in service fees. So if your Wisconsin house sells for $350,000, a service fee or commission of 6% would cost $21,000. 

Selling by-owner becomes an attractive option for people looking to save some money. But don’t let it fool you; selling by owner is not as easy as it seems. You will be in charge of everything, setting a competitive price, marketing, negotiating, hosting open houses, answering questions and phone calls, and so much more. The hardest thing for people selling by-owner to do is to set a competitive listing price. If you were to price too high, your house could sit on the market for months, and pricing too low may turn prospective buyers away, thinking something is wrong with the house. 

Furthermore, if you need to sell your Wisconsin house quickly, some of these selling options could take months before your property officially sells- leaving you to pay more monthly mortgage payments.

Click here to find out 5 Obstacles Homeowners Face When Selling Their Houses During the Winter Months in Milwaukee.

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Finding the best selling strategy for your needs will be necessary for a successful home sale and paying off your mortgage. 

Determine What Repairs Need To Be Made

After you figure out what selling strategy to use, you will need to survey the house for repairs. You may be aware of some of the renovations you need to make before selling; others may come as a surprise. If you’re unsure where to start, hiring a home inspector would be a good idea. A home inspector can access your home and list out all the necessary repairs he or she noticed. Once you get the report back, go through the items and figure out what repairs you financially can make and do the repairs on your own, or hire someone. This can be a tricky process if your home needs a lot of work. Repairs and renovations can cost thousands of dollars, and for many people, it’s hard to justify putting more money into a house they are about to sell. If you’re faced with this predicament, finding an as-is home buyer would be for you. As-is home buyers purchase homes in their current condition and require no repairs or improvements to be made. If you’d like to avoid the hassle and expense of doing repairs working with an as-is buyer would be highly recommended. 

Declutter and Stage

After you make the necessary repairs to your home, next comes decluttering, cleaning, and staging. Decluttering will involve cleaning out closets, the attic, and the basement, as well as the garage. If you have a lot of things stored in those areas that would interfere with someone looking at them, it would be best to get a storage unit to store these items temporarily. If you have any big pieces of furniture, putting those in storage would be a good idea too. It’s important to show how much space is available in the house, and having any oversized furniture can make a room look very tiny. 

After you’ve decluttered, you will need to do some thorough cleaning around the house. Make sure to dust, vacuum, sweep, and mop. You want your home to look clean and smell fresh for interested buyers.

Finally, you will want to do some staging. Staging a house involves making your home as neutral as possible; that way, prospective buyers can see themselves living there. If you have any personal photos around the house, make sure to store those temporarily. Increase the lighting around the house, replace burned-out lightbulbs, or swap them out for higher wattage bulbs.  Clean your windows, and open the blinds. Rearrange the furniture to create better flow and space. Tone down the colors too, if you have any bright colors or accent walls, painting over those with a neutral color would be a good idea. Lastly, add some curb appeal, mow the lawn, pressure wash any mossy areas on the house, replace any chipping paint, plant some flowers, and tidy up around the yard and patio. 

Wait For An Offer

Once you’ve decided on a selling strategy, completed repairs, decluttered, cleaned, and staged your home, it’s time to wait for an offer to come in. On average, it takes roughly 20 showings and 50 days on the market to get an offer in Wisconsin. After you accept the offer, the next step is to go into escrow, which on average takes 50 days for escrow to close and you to sell your house. So you would be looking at on average 100 days to sell your home, and that’s if everything goes smoothly. 

What Happens To Your Mortgage Once You Sell Your Home?

After your home sells, the sale proceeds will be used to pay off your outstanding home loan balance. If you don’t make enough money from the sale of your house to pay off your mortgage, you will need to make payment arrangements with the bank until the amount is paid in full. This is why some people look at refinancing or selling their property in a short sale instead. 

But to clear up some confusing information, when people sell, they think they have to pay the entire amount of interest divided over the 15 to 30 years. The reasoning behind this is that they agreed to that interest and assume they have to pay all 15 or 30 years’ worth- which is not the case. The interest is only owed for every month you have the loan. Once the home officially sells, those interest payments stop, and you shouldn’t get charged.

But don’t get too excited; sometimes the bank carrying your loan has an early payoff penalty on the mortgage if you pay it back early. So before you sell your Wisconsin home, take a look at your mortgage agreement for a due-on-sale clause – which would be where any penalty details would be noted.

Notice of mortgage non-payment in Wisconsin

What If Your Behind On Mortgage Payments….

As we said in the beginning, selling a house with a mortgage is very common. In most cases, putting your property on the market, finding a buyer, and settling your home loan debt when the home sells is all you will need to do to pay off the mortgage.

But if you have started to get behind on your mortgage payments, maybe even missing a payment or two, nearing the risk of foreclosure– you should be concerned that the traditional way to sell a house in Wisconsin will take too long. 

Remember, it can take roughly 100 days to sell a residence in Wisconsin if everything goes smoothly. But buyer contingencies can affect that timeframe. Typical contingencies include getting a clear home inspection or waiting for the buyer to sell their house before purchasing yours. Contingencies leave you at risk for a buyer to back out and for you to start the selling process all over again. This can be very overwhelming when you have a lot riding on the sale of your Wisconsin home.

→ Curious Why Your Home Isn’t Selling In Wisconsin? Click here.

Another Selling Solution

If you can’t afford to wait any longer, selling to a local home buyer could be something to look into. When you sell your property to a local home buyer like Cream City Home Buyers, you can speed up the selling process by eliminating the appraisal and financial contingencies that tend to come with selling to a traditional buyer. This would save you weeks or even months of monthly expenses like insurance, taxes, and maintenance. 

Cream City Home Buyers is a cash investor, which means they can close on your home within 7-14 days, significantly less than the average home sale time frame. Even if you need extra time, they can work with whatever timeframe is best for you. Paying in cash doesn’t obligate them to get bank approval or financing, which reduces the amount of time it takes them to buy a house.

Furthermore, this is an excellent option if you’re not looking forward to the thought of showing your house during COVID-19. Usually, they request one home visit, and in most cases, they just ask for photos or a video of your property before making you an offer for your house.

When working with Cream City Home Buyers to buy your house, they have an easy three-step home buying process, which includes no service charges or agent commissions. They will even pay closing costs.

Cream City Home Buyers will buy your property in as-is condition too. They don’t require repairs or renovations; they don’t even mind if you leave the house dirty when you move out. If you’re looking at paying thousands of dollars on home improvement, save time and money, and sell to Cream City Home Buyers instead.

Getting a cash offer is easy with Cream City Home Buyers- you will also be under no obligation to accept. But should you sell your house for cash? Why not?!  

Cream City Home Buyers is a Better Business Bureau accredited business with an A+ rating. To find out more about how it works or to learn more about the company, visit our website for helpful information. 

If you would like to sell your house before paying off the mortgage in Wisconsin, give Cream City Home Buyers a call today!

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