Can You Sell a House with a Mortgage?

Yes, you can absolutely sell a house with a mortgage, and honestly, it happens all the time. Most homeowners don’t wait until their mortgage is completely paid off before selling. In fact, selling while still paying a mortgage is often part of people’s financial planning. Whether you’re upgrading, downsizing, relocating, or simply ready for a change, having a mortgage on your home doesn’t lock you in.

The process just involves a few more moving parts, and that’s where working with real estate pros and trusted lenders in the Rio Grande Valley (RGV) makes all the difference. Let’s break down how it works and what to expect.

Understanding the Basics

Before you put up that "For Sale" sign, it's good to understand what selling with a mortgage really means. You technically don’t own your home free and clear , the bank or lender does until you pay off the loan. When you sell, the money from the buyer typically goes toward paying off the remaining balance of your mortgage. The rest is yours.

You’ll want to get a payoff quote from your lender. This number includes your remaining principal, interest through the payoff date, and possibly a few extra fees. It’s different from the balance you see on your mortgage statement.

Home Equity: What You Own

Home equity is the difference between your home’s market value and what you still owe on the mortgage. That’s the money you’ve built up by either paying down your loan or through your home’s value going up (or both).

For example:

• Home value: $275,000

• Mortgage balance: $190,000

• Equity: $85,000

If you're positive like this, great , you can pocket that equity after fees and closing costs. If you owe more than your home is worth, you’re in what's called negative equity or "underwater." It’s tougher, but not impossible, to sell in that situation.

Step-by-Step: How to Sell with a Mortgage

1. Call Your Lender

Request a payoff statement. This gives you a timeline and exact numbers to plan around. Ask about prepayment penalties, if any.

2. Hire a Real Estate Agent

Get someone who knows how to handle deals involving existing mortgages. They’ll help you price it right, market effectively, and negotiate for the best possible outcome.

3. Set the Right Price

Lean on your agent for a comparative market analysis (CMA). Combine that with your payoff amount and estimated closing costs to figure out how much you’ll walk away with.

4. Prep the Home

You want top dollar, so clean up, fix what’s broken, and make it look inviting. Think curb appeal, small repairs, and maybe a little staging. Pro tip: Great photos = more buyer interest online.

5. Review Offers

When offers come in, make sure the numbers cover your mortgage and other selling expenses. Your agent can help you decide what’s fair.

6. Closing Day

Once everything’s finalized, the buyer’s funds are sent to your mortgage company to pay off the loan. You get any remaining equity after that.

What Happens If You Have More Than One Loan?

Selling with a second mortgage, HELOC, or any kind of lien attached? That’s fine, but it requires a little more coordination. All those balances need to be settled before the title can transfer to the new buyer.

That’s where a title company steps in. They’ll do a title search to make sure everything’s clear and work with your lender(s) to pay off debts from the sale proceeds. Sometimes, you’ll need to negotiate with the lienholder to get a payoff amount that fits your sale.

Other Costs to Consider

Selling a home isn’t just about paying off your mortgage. You’ll also need to budget for:

• Real estate commissions (usually 5-6% of the sale price)

• Closing costs (title fees, recording, taxes, etc.)

• Prorated property taxes

• HOA dues, if applicable

• Repairs or buyer concessions, depending on inspection results

Some lenders charge a prepayment penalty, so ask about that early.

Short Sales: When You Owe More Than It’s Worth

If your home is worth less than what you owe, you might consider a short sale. That’s when your lender agrees to accept less than the full loan balance.

This can help avoid foreclosure, but it’s a longer process and can affect your credit. Not every lender will approve it, and it usually involves proving financial hardship. Definitely talk to a mortgage expert before heading down this path.

Mistakes to Avoid When Selling with a Mortgage

• Overpricing the home based on what you want, not what the market supports

• Skipping repairs that could turn off buyers or affect the appraisal

• Ignoring photography and staging , first impressions matter

• Not confirming your payoff balance, leading to surprise fees at closing

Real Talk: Is Selling with a Mortgage Worth It?

It definitely can be, especially if you’ve built up equity or need to make a life change. Just keep in mind it’s a transaction with more layers, which means having knowledgeable people in your corner matters even more.

Your agent and lender should be clear communicators, problem-solvers, and , most importantly , people you trust. If they know the RGV housing market inside and out, even better.

Whether you're trading up, relocating, or cashing out your investment, selling a house with a mortgage is very doable, especially when you have the right team backing you.

At Movement Mortgage RGV, we’ve helped countless folks across the Valley sell their homes and start the next chapter with confidence. We're not just about closing loans , we're about opening doors. We get what homeownership means to families here, and we’re here to guide you every step of the way.

Schedule a free consultation today with Movement Mortgage RGV and discover how easy and stress-free this process can be.

And if you’re comparing lenders? Look no further than the Best Mortgage Lenders in the RGV , that’s us. With transparency, experience, and heart, we’re the trusted choice in South Texas.