I’m embarrassed that I am a full grown adult, and don’t know how this works. I am so ignorant to it, I didn’t even know how to search Google for the question.
Basically, suppose you buy a home for $200,000 on a 30 year mortgage, and 5 years into your purchase, you manage to find a buyer who will pay $280,000. Of course, you did not pay $200,000 yet after only five years, if someone wants to buy your home.
These are optional guiding questions just so you can see how ignorant I am.
1) Do you get a check for the full 280,000 if they are able to pay in cash?
2) If they’re financing for 30 years instead (since they don’t have cash), do you have to wait 30 years to get your full amount of money? Like, does their monthly mortgage payment go to you?
3) Where does the bank come into this? Or can you bypass that?
4) What happens to the money you paid into the home during that 5 years?
In: 5
Don’t feel too bad, OP, it’s complicated! This is our third house and I still only vaguely understand how this works, but basically it’s between the lenders. Let’s say your house mortgage is being held by company A. You borrowed $200,000 from them, and you pay them $2000 a month for the past 10 months ($20,000). So you still owe $180,000 to that mortgage company. Then the buyer comes and buys your house for $300,000. They borrow that money from THEIR company, Who then pays off YOUR company, and because you now only owe 180k, The 120k difference would go to you. Of course, there are tons of taxes and fees, you are probably paying the buyers closing costs, and a million other little nickels and dimes being taken out, but basically that’s how it works.
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