Title query.
Question: To all the knowledgeable folks out there, I’d like to ask you a question.
Let’s say I own a house and I took out a home equity loan to buy a car. Is it true that I won’t be able to sell the house until I pay off the car? My understanding is that the home equity loan represents a lien against the house and therefore the potential buyer won’t get a clear title unless I pay off the car.
I hope the question makes sense and please correct me if I am wrong.
Thanks..
Answer: Here is what will happen if you sell the house:
1. The lawyer or title company handling the transaction will check the public records to see what loans and/or leins are on file for your property.
2. This search will reveal that you both a traditional mortgage and a home equity loan. The lawyer or title company will contact the lenders to find out the balance left on each loan.
3. When you settle on the house, both loans will need to be paid off. The amount of both loans will be subtracted from the amount of money you get for the house.
4. The lawyer or title company will take the money subtracted from what you receive and will use it to pay off both loans.
5. You will receice a check for the difference.
6. In the event that you have unusually large loans, or your house has fallen in value so much as to not cover the loan amounts, you will not get a check. In that case, you would need to bring money to cover the shortfall.
Note that you can list the house for sale, find a buyer, and get the buyer ready to purchase the house without paying off the loan first. The loans will be paid off from the sales proceeds on the day you settle and “deed over” your house.
Related Posts
Filed under: Home Equity Loan
Leave a Comment
XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>
TrackBack URL | RSS feed for comments on this post.