Can I Sell My House Without Informing My Mortgage Provider?


When you sell your house, there are a few aspects of the transaction that you need to have a solid understanding of. To start, you will have to come to an agreement with your mortgage lender prior to the closing on the sale of your house. Your mortgage loan has a provision known as a due-on-sale clause, which stipulates that the lender has the right to demand full repayment of the loan following the sale of your house. Mortgage lenders, on the other hand, often do not need to be alerted when borrowers put their houses up for sale; rather, they only need to be informed when the residences actually sell.

Mortgages and Sales

The due-on-sale rights are one of the several interests that mortgage lenders obtain in the properties that serve as collateral for their loans. According to John T. Reed Publishing, loan due-on-sale rights provide lenders the ability to call in their debts whenever the properties that are used as collateral for the loans are transferred or sold. Nevertheless, since you are the owner of the title and deed to your property, you have the basic right to sell your house in any manner that you want. There are specific circumstances surrounding the sale of a house, such as short sales, in which you are required to inform your lender and receive its consent before moving through with the sale.

Short Sale Notifications

In a short sale, the price of the house is reduced below the amount that is still due on it. According to Bankrate, getting the consent of a mortgage lender to carry out a short sale might be challenging at times. If you do not advise your lender of your intention to try to sell your house for less than what is owed on it, the lender may be able to foreclose on the property in order to preserve its financial interests. If, on the other hand, you are able to make up the difference between what your mortgage owes and what it is worth by the time the sale of your property is finalised, your lender will most likely be unconcerned.

Informing Mortgage Lenders

Even if it is not mandated by your mortgage contract, it is in your best interest to let your lender know about your plans to sell your house. To begin, prior to selling your property, you will most likely need to be aware of the remaining amount on your mortgage loan. It is possible that your lender may be able to provide you with a more accurate mortgage payback number if you let them know that you want to sell your property. It is up to you to determine whether or not to let your real estate agent know the amount that you have paid off on your mortgage loan.

Home Sale Notifications

As soon as you decide to accept a purchase offer on your property, you are legally required to communicate your decision to your mortgage lender. If there are any liens placed on your property, the title of your house cannot be lawfully transferred to the person who purchases it. Your mortgage debt leaves a lien on the title of your house and will need to be paid off before the sale can be finalised. After you have sold your house, a settlement agent will determine the remaining amount on your mortgage loan and make the necessary arrangements for its payback using the proceeds from the sale of your property.