If you have a second mortgage on your house and you’re thinking of selling, you probably have some concerns. After all, it can feel daunting to sell your house before it’s paid off. However, it’s actually quite common to sell your home before it’s paid off. According to FreddieMac, The 30-year fixed-rate mortgage is preferred by almost 90% of homebuyers due to its combination of affordability and flexibility, making it the top choice. In Q1 2023, homeowners who sold their homes had an average ownership duration of 5.59 years, a decrease from 5.81 years in Q4 2022 and 5.68 years in Q1 2022—reaching the lowest point since mid-2011, as reported by ATTOM. The report highlighted a decline in average tenure for 56% of metro areas compared to the same period in 2022. So, selling your house with one mortgage still in repayment is the norm. What if you took out a second mortgage? Don’t worry. Taking out a second mortgage is also pretty common, and it can be a smart move if you want to secure money for a remodel, buy a new home, or access extra cash at a relatively low rate. So, can you sell your house with a home equity loan or second mortgage? The short answer is: “yes.” Whether you have a home equity loan or another type of second mortgage, it shouldn’t stop you from selling your house. Still, if you’re worried about triggering penalties, having low equity, potential housing crashes, or being stuck with a post-sale bill you can’t afford, read on. We’ve pinned down advice from top real estate experts that show you how to sell a house with a second mortgage. A second mortgage is a loan secured against a property that already has a mortgage. Some homeowners take out a second mortgage to help with a down payment, while others use a second mortgage to tap into their home’s equity. Home equity is the portion of your home you own, while your lender owns the part you haven’t fully paid for. In line with findings from a report by Black Knight, the average mortgage holder has around $199K in accessible equity. Although this represents a decrease from the historic highs observed in 2022, it remains a substantial amount from a historical perspective. This available cash can significantly help with buying a new home, improving your current one, or pursuing other opportunities. What’s more, a second mortgage’s interest rate is usually lower than a credit card, making it a relatively inexpensive way to borrow money. Just know that when you tap into your home equity, you put your house up as collateral. That means your lender can repossess your house if you stop making payments.What is a second mortgage?
