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
Let’s say you put $40,000 (20% down) and originally you owed the bank $160,000.
As you pay your mortgage every month, the amount you owe the bank goes down. That’s where your money is going. Let’s say that after 5 years now you owe the bank $150,000.
Someone buys your house for $280,000.
First the bank gets paid off. They get paid the remaining balance of what you owe them. Now there’s $130,000 left, but now the real estate agents and/or lawyers get their cut, which might be around $10,000. There might also be title transfer fees and taxes.
You’d get the remainder as a check – maybe around $110,000.
No, you can’t bypass the bank. The bank actually co-owns your house. You can’t legally sell it without involving them in the transaction.
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