Can I Sell My Utah Home FSBO with a Mortgage Still on It? Yes—Even with Seller Financing!
So, you’re selling your Utah home For Sale By Owner (FSBO), ready to dodge agent fees and take control. Then you spot that mortgage statement on your counter and wonder: Can I sell my Utah home FSBO with a mortgage still on it? Good news: Yes, you can! And if you’re feeling adventurous, seller financing might even spice up the deal. It’s not as wild as BASE jumping in Moab, but it takes some savvy. Here’s how to pull it off—mortgage, seller financing, and all—Utah-style.
Step 1: Mortgage? No Biggie—You Can Still Sell
Let’s clear the air: A mortgage doesn’t chain you to your house. It’s just a lien the bank holds until it’s paid off—you still own the title and can sell FSBO. Most Utah homeowners (about 60%) have mortgages, and they sell all the time. Your mission? Pay off that loan at closing—or get creative with seller financing.
Step 2: Crunch the Numbers—Equity and Payoff
Call your lender for a payoff statement—the exact amount you owe, including interest. Subtract that from your home’s value (check comps or get an appraisal). If you owe $200,000 and sell for $300,000, you’ve got $100,000 in equity (minus closing costs). Price it to cover the payoff and costs—don’t leave yourself writing a check instead of cashing one. Utahfsbohelp.com can help you nail the math.
Step 3: Seller Financing 101—Be the Bank (Sort Of)
Want to sweeten the pot for buyers? Consider seller financing—where you act as the lender. You keep the existing mortgage and let the buyer pay you monthly, covering your mortgage payment plus a little extra. It’s a win-win: they skip bank hassles, you get steady cash. Two flavors to try:
Wraparound Mortgage: The buyer pays you a higher rate than your mortgage, you pay the lender, and pocket the difference. Say your rate’s 4%—charge them 6% and profit!
Contract for Deed: They pay you installments; title transfers once they’ve paid in full.
But here’s the catch: If your mortgage is an FHA or VA loan, you can’t wrap it. Federal rules forbid wrapping those loans into seller financing—it’s a legal no-no that could trigger the “due on sale” clause, demanding full payoff. Check your loan docs or call your lender to confirm.
Step 4: Due on Sale Clause—Know the Risk
Most mortgages have a “due on sale” clause—sell the house, and the lender can demand the full balance. Seller financing might trip this wire, though banks often look the other way if payments keep flowing. Want to play it safe? Pay off the mortgage at closing with the buyer’s funds (cash or their loan). Riskier? Proceed with seller financing and roll the dice—just don’t say I didn’t warn you!
Step 5: Title Company to the Rescue
For a standard sale, Utah title companies handle the mortgage payoff like pros. Buyer’s money goes in, lender gets paid, lien’s lifted, and you pocket the rest. With seller financing, they’ll still clear title hiccups, but you’ll need a separate promissory note and deed of trust for the buyer. Pro tip: Hire a real estate attorney to draft those—$200 beats a handshake gone wrong.
Step 6: Underwater? Options Exist
Owe more than it’s worth—like $300,000 on a $280,000 home? You can bring cash to closing, negotiate a short sale with your lender, or hold off for Utah’s market to climb. Seller financing won’t fix negative equity unless the buyer’s payments eventually cover it—dream big, but plan smart.
Step 7: Close It Out—Cash or Contract
At closing, either the title company pays off your mortgage and you walk with cash, or you launch your seller-financing adventure with signed docs. Standard sale? Easy peasy. Financing? You’re now a landlord-ish figure—screen buyers hard (credit, income) to avoid a deadbeat disaster.
Wrap-Up: Mortgage, Schmortgage—You’ve Got This!
Selling your Utah home FSBO with a mortgage is totally doable, and seller financing can jazz it up—just steer clear of FHA/VA wraparound traps. Whether you cash out or play banker, utahfsbohelp.com’s got tools to guide you. Now, go sell that house—mortgage and all—and celebrate with a Zombie Diet Coke from Swig!