If you want to sell your house fast in Detroit, you may be wondering, “Can you sell a house with a HELOC?”
You can, but it may significantly affect the profit you’ll earn from the sale. That’s because you must settle the outstanding loan balance before or at closing.
In this post, Wise Property Buyers helps you understand how to sell your house with a HELOC.
Understanding How a Home Equity Line of Credit (HELOC) Works
When you apply for a HELOC, you don’t receive a lump sum as you would with many traditional types of loans. Instead, your lender gives you a revolving line of credit from which you can draw over several years while making interest-only payments.
You’ll start paying back the principal amount and interest on the remaining loan balance after the draw period elapses. If you decide to sell your house, you must settle your HELOC balance in full. The lien this home equity loan places on your home allows the lender to collect all money owed before you can transfer the title to the new owner. This debt may include the outstanding loan balance, interest accrued, and any applicable prepayment penalty.
So, can you sell a house with a HELOC in Detroit, Michigan?
The short answer is yes. The catch is that your outstanding HELOC amount and any other lien on the property will reduce any equity you’ve accrued. You’ll pocket whatever remains after the sale proceeds distribution.
Common Closing Challenges When Selling Your House With a HELOC in Detroit, Michigan
Selling your house with a HELOC shouldn’t be stressful, but these two scenarios often complicate the closing process:
Negative Equity
Suppose your mortgage payoff amount, the HELOC, and other liens on the house exceed its current value. That means you’re underwater, or in a situation called negative equity. Instead of receiving proceeds from the sale, you may owe the lender money to cover the difference.
Prepayment Penalty
Your HELOC lender may charge a fee if you pay off your outstanding balance early. This prepayment penalty or early termination fee protects the lender from losing the interest they would have earned if you had stayed for the entire loan term. You may pay a flat fee or 2-5% of your loan, depending on the lender.
Selling your house with a HELOC to a reputable cash buyer can save you the stress of the closing process requirements and make it easier to settle your HELOC with the lender.
Sell Your House With a HELOC to Wise Property Buyers for a Hassle-Free Process
If you’re still wondering, “Can you sell a house with a HELOC?’’ you can sell fast for cash in any condition to Wise Property Buyers. We’ll save you the headaches of a traditional sale; we purchase your home as-is, offering a fair, cash offer anywhere in the Detroit area.
Call Wise Property Buyers today at (313) 513-8824 for your cash offer and learn more about selling a house with a lien on it.