Can You Sell Your Home If You Have a HELOC? What You Need to Know

If you have a Home Equity Line of Credit (HELOC) and are considering selling your home, you might be wondering how it will affect the process. The good news is that it’s entirely possible to sell a home with an active HELOC, but there are a few important steps you’ll need to take to ensure a smooth transaction. For expert advice and guidance, reach out to Todd Maltzahn, a trusted realtor who can help you navigate the process with ease..

1. Pay Off the HELOC Before Closing

When you sell your home, any remaining balance on your HELOC must be paid off. The proceeds from the sale will be used to settle the debt. It’s crucial to consult with your lender for a payoff statement so you know exactly how much you owe.

2. Check if You Owe More Than Your Home’s Value

If the sale price of your home is less than what you owe on both your primary mortgage and HELOC, you’ll be in a “negative equity” situation. This might require negotiating a short sale with your lender, which is an option for selling the home for less than the outstanding loan balance.

3. Closing Process with a HELOC

At closing, the HELOC lender will receive the payoff directly from the proceeds of the sale. If there are any remaining funds after paying off both your mortgage and HELOC, you’ll receive the balance.

Selling a home with a HELOC is possible, but it’s essential to understand how it impacts your sale and be prepared to work with your lender. For the best outcome, consult with a real estate agent like Todd Maltzahn and a financial advisor before you list your home to ensure a smooth and successful transaction.