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.

States vary slightly. But there will be a real estate closing when the home sells.

The buyer will have 280k, either in cash from his funds or in the form of money from his bank if there’s a mortgage. Maybe some combo of the two. That doesn’t really impact you as seller.

The money goes into escrow at closing. That account is then used to pay off any liens on the property, like your remaining mortgage balance. Once all liens are cleared, the rest will go to you in a check or wire transfer.

Depending on where you live, you probably get the funds the day of closing.

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.

You get paid the 280000 however out of that you will be paying off the remainder of your mortgage, so if in 5 years you paid say 20k. You would get the 80k more you sold your house for, and with the 200k remaining, you will pay off the remaining 180k of your mortgage, leaving you with that 20k you had paid over 5 years in your pocket. After the sale you come out with 100k total. (All of that is assuming no taxes or reality fees which is highly unlikely)

I believe the bank is going to be involved from day one since you have a mortgage through them, and they need to be involved with large money transfers.

The money from the sale will first go to the bank to pay off the remaining balance of the loan and the rest will go to you.

Say you paid off $30,000 of that loan and we ignore interest, taxes, fees, whatever. You still owe $170,000 and you sell for $280,000. $170,000 will go towards paying off the mortgage, you’ll receive the other $110,000