Still owe on home equity loan after selling house?

If the home equity loan is on the home you are selling, you will be required to pay it off when the home is sold. A home equity loan or line of credit is treated like a second mortgage. You might consult with your lender (with whom you have the home equity loan). If you will be purchasing another home, you might be able to switch the home equity loan to your new home, depending on how much money you are putting down, as well as a number of other factors as determined by the policies of your lender for the home equity line of credit. I had a client do exactly what I have described above. But if you are not purchasing another home, you will have to pay it off at the time of sale, because you no longer have the "equity" (in your home) which was the collateral for the loan when you got it.

A home equity loan is granted when you have invested money in your home. You could have paid a large down payment, or you could have had the loan for a long time so you have already paid off a good part of it. The amount which a lender will lend to you in the form of a home equity loan depends on the value of your home compared to the amount you owe on your mortgage. The difference is the equity you have in your home. Thus another way to acquire equity in a home is if home prices have risen a lot since you purchased your home. There is usually an appraisal to acquire a home equity loan to determine the value of the home.

The terms of the home equity loan are that you have placed a lien on the house. You can not sell your house to another person untill all the liens are payed.

The best method is to convert the debt to a personal loan.

Hi,

Call the lender and explain to them your problem and see what they can do. If they do nothing and if you can prove that you're poor and/or have some type of hardship (illness, loss of job, etc), you can negotiate a "short sale". Basically a short sale is a situation in which the liens on the home are worth more than the house itself. You can then negotiate with the lender to lower your loan so that you can sell your place.

Contact me with why you're selling your house and I'll see what options you have.

Good Luck

There is one thing you could do, that is if you have other property that you could used to secure the loan than you could use that and sell the house. Other than that I don't thank the loan company will just let you sell the house. Or you could ask the buyer to let you carry a second morgage for the 20,000 and you continue to pay 400.00 on that morage using the property as collateral its a long shot but it might work if you can get the buyer to trust you or offer the buyer some other collateral that you have.

You'll either have to pay-off the equityline/loan at closing or roll it over into another product - some kind of unsecured loan that you'll almost certainly be charged more (a higher rate ofinterest) for.

My advice is pay-off the equityline at closing, then re-establish one if you wish when you buy another place.

By the way, IRA money can be used to help buy a home, if you have one. Knowing that might help you decide what to do about that equityline debt.

.You will have to pay the loan immediately upon closing. Or simply the buyer will not own the house until the equity loan company releases their lien upon the property.You don't get a loan without some type of lien or collateral

A 1099C is only issued after the balance on the loan is forgiven. It may show up years later and not necessarily in the year that the house was sold. I agree that you should call the bank and see what happened to the balance owed.

I work for a title mortgage company and I do believe you will have to pay that off before you can sell... They will not let you keep a line of credit against a home that you no longer own.

YOU must pay off the home equity either before or at the closing table.

the loan is towards the house.. that sucks that you lost money on your house though.. you have to make a new loan that does not have leverage... but it'll have higher interest now