What happens to my mortgage when i sell my house?

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When you decide to sell your house, it’s natural to wonder what will happen to your mortgage. Selling a house involves several financial aspects, and understanding how your mortgage will be affected is crucial. In this article, we will explore what happens to your mortgage when you sell your house, providing you with a comprehensive understanding of the process.

Paying Off the Mortgage

Primary Residence: In most cases, when you sell your primary residence, the proceeds from the sale are used to pay off your existing mortgage. The mortgage lender will receive the remaining balance, and any excess funds will be given to you as the homeowner.

Remaining Mortgage Balance: If the sale proceeds are not sufficient to cover the remaining mortgage balance, you will be responsible for paying the difference. This is known as a “shortfall,” and you will need to work with your lender to determine the best course of action, such as negotiating a payment plan or seeking a short sale.

Transferring the Mortgage

Assumable Mortgage: In some cases, your mortgage may be assumable, meaning that the buyer can take over your existing mortgage terms. This can be advantageous if you have a favorable interest rate or if the buyer is unable to secure a new mortgage. However, assuming a mortgage requires lender approval and may involve additional fees.

Qualifying for a New Mortgage: In most situations, the buyer will need to obtain a new mortgage to purchase your house. This process involves the buyer applying for a loan, undergoing a credit check, and meeting the lender’s requirements. Once the buyer’s new mortgage is approved, the funds will be used to pay off your existing mortgage.

Releasing the Mortgage Lien

Mortgage Satisfaction: When your mortgage is paid off, the lender will provide you with a document called a “mortgage satisfaction” or “release of lien.” This document confirms that your mortgage has been fully repaid and releases the lender’s claim on your property.

Recording the Release: It is essential to record the mortgage satisfaction with the appropriate government office, typically the county recorder’s office. This ensures that the release is officially documented and removes any potential issues when selling or refinancing your property in the future.

Impact on Credit Score

Timely Payments: As long as you have made your mortgage payments on time, selling your house should not have a negative impact on your credit score. However, if you have missed payments or defaulted on your mortgage, it can significantly affect your creditworthiness.

Debt-to-Income Ratio: When you sell your house and pay off your mortgage, your debt-to-income ratio may improve. This ratio is an important factor considered by lenders when determining your creditworthiness for future loans.


When you sell your house, your mortgage will either be paid off using the sale proceeds or transferred to the buyer. It is crucial to work closely with your lender throughout the process to ensure a smooth transition. Remember to record the mortgage satisfaction and understand the potential impact on your credit score. By understanding what happens to your mortgage when you sell your house, you can navigate the process with confidence.


– Bankrate.com
– Investopedia.com
– TheBalance.com