A question we get a lot is “Can I let someone take over my mortgage when I sell my house?” The answer is overwhelmingly yes. This is a common way to sell your house, especially in the current housing environment. As rising interest rates have continued to make home ownership less affordable, this is a common way to get the most value out of your house, i.e. the most cash in your pocket. Here are some benefits of selling your house by letting a home buyer take over your payments.
1.) A home buyer is often willing to pay more if they can take over the current mortgage. There are a number of reasons for this:
a. The current interest rate environment is considerably higher than interest rates of the last 15 years. It costs someone almost double in monthly payments to what it did less than two years ago, with mortgage rates climbing into the 7%+ range.
b. A home buyer with multiple properties faces increasing scrutiny from banks with each additional purchase. Banks require more and more collateral and increase the risk of the transaction for the home buyer. By letting a home buyer take over your payments, it makes them able to pay you more for the property, resulting in more cash in your pocket.
c. A cash home buyer is often looking at multiple properties. The increased downpayments required by banks will make the buyers choosier and not able to give as good of deals as taking over the current payment.
2.) Taking over the mortgage is one of the quickest ways to sell your house. When a buyer is a cash buyer, it just means they do not require traditional bank financing. Most cash buyers utilize some sort of investor, hard money loan, or other credit line in the background. When they say cash, this is what they are talking about. They don’t require traditional bank financing. These products still take time to underwrite however. If you let a home buyer take over your existing mortgage, it greatly reduces the amount of time it takes to close on your house.
3.) If you are behind on your payments, selling your home by letting a buyer bring your payment current and take over the payments improves your credit. Nothing improves credit faster than positive payment history on a mortgage. Why is that? The mortgage is the most important credit item to an individual. If someone gets a car reposed, they can always uber places. If someoneis behind on their credit card, then the repercussion is they cant use that credit card. But if someone were to fall behind on their mortgage, they could potentially look at being homeless. That is why the credit bureaus put such an emphasis on mortgage payments. If you are in a situation where you need to improve your credit, nothing is going to improve it faster than positive payments on your mortgage.
4.) If there are repairs that need to be made to your house, allowing someone to take over the mortgage payments gives them more money for repairs, which in turn lets them pay more for your house and puts more money in your pocket. Things you want to consider are the age and condition of your roof. How old is your water heater? What is the status of your heating and air system and when was the last time it was serviced. Newer systems are not allowed to use freon anymore so if you have an older system that has freon, a lot of times repairs cant be done and the units have to be replaced. If a home buyer has to make these improvements and they don’t have to pay cash for your entire property, then there is more room for them to give cash to you.
Depending on your situation and timeline, selling your house buy letting the home buyer take over your current mortgage can be the quickest method and allows the most cash to you. Every situation is different but this is an excellent strategy for a lot of home sellers.
