Whether you want to change your home for one that better suits your needs and lifestyle or you need to sell your property for some economic reason, you are surely wondering if it is possible to sell despite not having settled the mortgage loan.
The answer is simple: yes, you can sell your house, even if you haven’t finished paying for it; This is because when you take out a mortgage loan, technically the house is already yours, since it is registered in your name.
However, when buying a home through a mortgage loan, the property remains as collateral for the payment of the debt, that is, a “lien” is imposed on it. This means that the financial institution that gave you the credit has a right to the property in case you do not pay off the debt.
For this reason, in order to carry out the sale of that property you must liquidate the credit, which will be done with the payment you receive from the buyer. This sounds more complicated than it really is, so here we will explain step by step what you must do to be able to sell your house, even if you have not finished paying for it.
- The first thing is to request a “balance letter” from the financial institution that gave you the credit, we are talking about the bank, Infonavit, Fovissste or Sofom. This letter informs what the current credit balance is, that is, the exact amount that must be paid to leave the account at zero; It will also include the information on how that amount must be paid and the notary that can carry out the lien release process. It is important that you request this document in time, take into account that the institution may take several weeks to issue the document.
- The next step is to deliver the balance letter to the notary public in charge of carrying out the purchase and sale operation. The notary will supervise the process, carry out the administrative procedures and distribute the corresponding payments between the financial institution that granted the credit and the owner of the property.
- How are the payments distributed? This point tends to cause confusion, since some owners believe that they will receive the full amount, but we must remember that the payment that the new buyer makes will serve to settle the original mortgage loan. Let’s say, for example, that a property will be sold for 1 million pesos and that $750,000 of the mortgage loan remains to be paid; then, the notary will distribute the payment as follows: $750,000 for the bank and $250,000 for the seller.
- Once the financial institution that granted you the credit receives the payment, it must provide you with the settlement letter, which you will deliver to the notary so that he can cancel your mortgage and release the lien on the property to notarize it to the new owner.
- It is important to remember that paying off your mortgage credit does not automatically eliminate the lien on the property, so you must make sure that the process is carried out before the Public Registry of Property.
As you can see, the process to sell a property that is still mortgaged is not as complicated as it seems; however, it requires the intervention of a notary public to be able to carry out the operation legally and thus guarantee that your debt is settled and that the new owner can deed the property in his name.
