How Does Selling A House With A Mortgage Work in San Antonio, TX

Mortgages make it easier to buy a home without using all your savings, whether you’re a first-time buyer or new investor. Many people choose a 30-year loan because they plan to stay long term, but life can change—you might move for work, need more space, or want to be closer to family. If you need to sell before paying off your mortgage, you may wonder what happens next. This article explains what to expect and how We Buy ALL Houses San Antonio can help guide you through your options so you can make confident decisions.

Can You Sell A House With A Mortgage In San Antonio? 

Yes, you can absolutely sell your house even if you still have a mortgage. The remaining mortgage balance will be paid through the sales proceeds. 

Most homeowners in the U.S. finance their homes and don’t wait until the loan is fully paid off before selling. The National Association of Realtors (NAR) found that most homeowners sell after about 10 years of ownership. Since mortgage terms often range from 15 to 30 years, with longer terms being increasingly popular because of the lower monthly payments, many people sell their homes well before the loan term ends. Because of this, selling with an existing mortgage is completely normal, especially if you chose a longer loan period. 

An important thing to watch out for when selling a house with a mortgage is the prepayment penalty clause. A prepayment penalty applies when a borrower pays off a loan earlier than agreed, which can result in lost interest for the lender. While prepayment penalties are no longer common with most modern mortgages, they can still exist in some loan agreements. Therefore, it is always a good idea to review your loan terms or check with your lender ahead of time so there are no surprises at closing. 

What If Your Sale Can’t Cover The Mortgage: An Underwater Home

Selling a house with a mortgage is usually straightforward and follows a process similar to any other home sale, as long as the sale proceeds are enough to pay off the remaining mortgage at the end of the transaction. Problems start when your home’s equity isn’t enough to cover what you still owe in the loan. 

Your home’s equity is the portion of the property you actually own versus what the bank still owns. For example, if you purchased your home for $300,000 and still owe $260,000 on the mortgage,  but the home can only sell for $250,000, the sale would not be enough to cover the loan. 

When the sale price cannot pay off the mortgage, you have negative equity and your home is considered underwater. This often happens when mortgage payments have been missed or when market conditions change and home values drop. 

If this is your situation, you generally have three main options to consider: 

Wait To Sell At A Better Time 

If the sale of your home cannot fully pay off the mortgage, the lender usually will not allow the sale to go through, especially if your loan includes a clause that requires the balance to be paid in full once the property is sold. In this situation, waiting to sell may be the best option. 

By holding off, you give yourself time to catch up on any missed payments, continue paying down the loan, and allow the market to improve. Over time, your property may appreciate in value, which can increase your equity and put you in a better position to sell later. However, while waiting to sell usually does not come with penalties or long-term consequences, it can delay your plans and limit your flexibility in the short term. 

Opt For A Short Sale 

If you truly need to sell and waiting a few years just isn’t in the cards, you can contact your lender and request a short sale. A short sale happens when you sell your property for less than what you still owe on the mortgage. This option is usually considered a last resort–often before a home goes into foreclosure. 

A short sale requires lender approval since the bank must agree to accept less than the full amount owed and forgive the remaining balance. Many lenders are willing to consider this because recovering most of the loan through a short sale is often better than going through foreclosure and risking a larger loss. 

One downside is that you will not receive any proceeds from the sale, as all funds will go directly to the lender. Moreover, a short sale can also negatively impact your credit score. That said, for homeowners who are truly underwater on their property, working with cash home buyers in San Antonio or in nearby cities can make a short sale a more practical way to move on, avoid foreclosure, and become mortgage-free.

Subject-To Transactions 

Another option you can consider is taking an alternative route called a subject-to transaction. In this arrangement, the buyer purchases the property subject to the existing mortgage, meaning they take over making the monthly payments. The mortgage, however, remains in your name, so this is a separate contract that allows you to technically sell the property while still being tied to the loan. 

The risk is that since the mortgage is still legally under your name, if the buyer (or the new owner) stops making payments, you are still responsible for the mortgage. Because of this, it’s important to work with an attorney and a real estate professional who can help structure the deal, minimize risks, and determine if this option is viable for your situation. 

You may find buyers interested in taking over your mortgage payments if they struggle to qualify for a new loan themselves or if your mortgage has a more favorable interest rate. This approach can also be beneficial to sellers facing foreclosure or those looking for a better alternative to a short sale, as it can protect your credit and potentially allow you to negotiate a stronger deal. 

Take note: this option may not be possible if your mortgage includes a “due on sale” clause, which requires the full mortgage balance to be paid immediately when the property is sold. Always check your loan agreement before pursuing a subject-to transaction. 

How to Sell A House With a Mortgage

When selling a home with an existing mortgage, attention to detail, preparation, and planning are what lead to a successful and profitable sale. While it may sound like extra work, in reality, it only involves a few additional steps compared to a mortgage-free home sale. With the right focus, much of this can be handled in a short amount of time—especially when working with a company that buys homes in Kirby or in nearby cities.

Know Your Mortgage Payoff Amount

The first step when planning to sell your home is to contact your lender. To properly plan the sale, you need to know not only your remaining mortgage balance but your total payoff amount. 

It’s important to understand the difference between the two. Your mortgage balance shows how much you still owe on the loan, but it does not reflect the full amount required to pay it off. On the other hand, the payoff amount includes accrued interest, possible fees, and any other charges required to close the loan. When speaking with your lender, ask for an official payoff statement. 

Payoff statements usually come with an expiration date and are often valid for up to 30 days. Because of this, timing matters, and it’s best to request the statement when you are ready to actively plan your sale.

You should also ask your lender if your mortgage includes a prepayment penalty or a due-on-sale clause, as either of these could affect your costs or how the sale is handled at closing.  

Determine Your Home’s Value

Now that you know exactly how much you owe, the next step is to figure out how much your home is worth today. This helps you understand how much equity you have and whether the sale will cover your mortgage and related costs. 

If you’re working with a real estate agent, they can help you determine your home’s current market value by running a comparative market analysis based on similar homes in your area. 

If you’re selling on your own through a For Sale By Owner (FSBO) listing, working with cash buyers, or simply want to double-check the numbers, you can also do your own research. A quick online search of nearby homes for sale that are similar in size, location, and condition can give you a general idea of value. You can also try online home value estimators, which are helpful as a starting point, though they may not always reflect current market conditions or unique features of your property. 

For the most accurate estimate, consulting with a real estate agent is usually the best option, as many agents will provide this information at no cost in hopes of getting you on as a client, so you can gather reliable pricing insights without committing to hiring them right away. 

List Your Expected Costs 

When selling a home, your mortgage isn’t the only expense that the sale needs to cover. That’s why it’s important to start with a clear list of your expected costs. Selling a home comes with several expenses, and in many cases, sellers spend around 10% of the sale price on total selling costs.  

That 10% is normally generally made up of the following: 

• Closing costs, which are usually 1-3% of the total sale price 
• Pre-listing costs, often ranging from 1-4% of the total sale price
• Agent fees, which commonly fall between 3-6% of the total sale price 

Closing costs can include title transfer fees, escrow fees, recording fees, taxes, and, in some cases, seller concessions requested by the buyer. Pre-listing expenses cover things like repairs, minor home improvements, staging, professional cleaning, and any updates needed to make the home more appealing to buyers. These costs can add up quickly, so accounting for them early helps you avoid surprises. 

Calculate Your Estimated Net Proceeds

Now that you know your home’s value, your remaining mortgage balance, and your estimated selling costs, it’s time to calculate your potential net proceeds. Your net proceeds are what you walk away with after all expenses and the mortgage are paid off. 

For example, if the median sale price in San Antonio is around $260,000, you could expect roughly $26,000 in selling costs based on the 10% estimate. That leaves about $234,000 before factoring in your remaining mortgage balance. If you still owe $200,000 on your loan, your estimated net proceeds would be around $34,000. 

Keep in mind that this estimate does not include additional expenses such as moving costs, utility transfers, or final repairs. While these numbers are not exact, running through this calculator gives you a realistic picture of what selling your home might look like financially. 

Is it the Right Time to Sell?

With the ballpark estimated net process, you are now in a position to decide whether moving forward with the sale makes sense for your goals. 

If proceeds aren’t what you expected 

If the numbers aren’t to your liking, it may be worth considering waiting a few years, especially if you’re close to paying down a significant portion of your mortgage. You can also explore ways to reduce costs by taking alternative routes, such as limiting repairs only to what is necessary, handling cleaning and staging yourself, or choosing a selling strategy that minimizes fees. 

If your sale value isn’t high enough

Sometimes the issue isn’t the mortgage but the market. If the home values are low or it’s the off-season, waiting for better market conditions could result in a higher sale price. Selling during a stronger market or peak season can make a noticeable difference in how much you walk away with. 

Ultimately, the decision comes down to your personal goals, financial situation, and timeline. While selling right away may make sense for some, waiting can often be the smarter and more strategic choice for others. 

Competitively Price Your Home 

Pricing your home competitively is one of the most important parts of a successful sale. Some sellers make the mistake of pricing their home too low, thinking it will automatically attract more buyers, but that can happen; it can also raise questions. Buyers may wonder why the home is priced below similar properties and whether there is an underlying issue that could be a poor financial decision in the long run. 

On the other hand, pricing your home too high can also work against you. Listing at the exact price you hope to get, or higher than your home’s true value, often makes buyers cautious. If your home appears overpriced compared to similar homes in the area, buyers may skip it entirely and see nearby listings as better options. 

Remember that homes with existing mortgages are common, and selling competitively is no problem. When a home is priced correctly and matches what buyers are looking for, it can generate strong interest and even lead to multiple offers. In some cases, this competition can push the final sale price higher than expected, outperforming homes that were priced too aggressively from the start. 

Prepare Your Home For The Sale 

If everything looks good and selling still makes sense for you, the next step is to prepare your home for the sale. Start packing and clearing our personal belongings. This not only makes your home easier to clean but also helps it look more presentable during showings. 

Creating a neutral space is important so potential buyers can picture themselves living there. Removing personal items, family photos, and strong design choices can make a big difference. Touching up walls, especially areas with visible marks or wear, and keeping the home clean and organized will help your property show at its best and attract more interest from buyers. 

Complete The Sale And Settle Your Mortgage 

After working through negotiations and finding the right buyer, you’re finally at the finish line. After weeks or even months of preparation, it’s time to close the deal and pay off the remaining mortgage. 

At closing, the sale proceeds are handled through escrow. The escrow company sends the payoff amount  directly to your lender to clear the mortgage, and once the loan and all closing costs are paid, you will receive the remaining funds as your profit. This step officially completes the sale and releases you from the mortgage tied to the property. 

FAQs

What happens to your mortgage before the sale closes?

While preparing your home for sale, you remain responsible for the mortgage and must continue making payments until the day the sale officially closes. Even if your home is listed or under contract, the loan doesn’t transfer, and you are still expected to stay current to avoid late fees or credit issues. 

In San Antonio, the average home sale takes about 83 days, and with the market leaning towards a buyer’s market, which means increasing inventory, homes may take even longer to sell. This means you should plan for several months of mortgage payments during the selling process, since missing a payment can add extra costs and create complications. 

Can you get a second mortgage before selling your home?

Qualifying for a second mortgage to buy a new home before selling your current one largely depends on your debt-to-income ratio and your credit score. It is possible to carry two mortgages at the same time, as long as you meet the lender’s requirements. 

In most cases, lenders look for a solid credit score, often starting around 680, along with a debt-to-income ratio that is usually below 43%. They will also consider your income stability, existing debts, and your ability to comfortably handle both monthly payments. 

Loan requirements can vary by lender and loan type, so it’s best to consult directly with your lender. 

Final Thoughts:  How Does Selling A House With A Mortgage Work in San Antonio, Texas?

The main thing you need to consider when selling a house with an existing mortgage is whether the sale price will be enough to cover what you still owe on the loan. 

If you have lived in your home for a while and have stayed current on your mortgage payments, this is usually not an issue. With proper upkeep, most homes gain value over time, and in today’s market, appreciation often works in your favor. That means the sale of your home will typically pay off the remaining mortgage balance and leave you with equity. 

We purchase properties as-is and pay cash, giving homeowners mired in difficult situations a faster and more flexible alternative to traditional home selling. When you’re already dealing with a challenging property, there’s no need for the sale to add even more stress. We Buy ALL Houses San Antonio provides a hassle-free, stress-free selling experience from start to finish.

Get your no-obligation, competitive cash offer today. Contact us at (210) 300-3307 or fill out the short form below to get started.