Selling a house with a HELOC or second mortgage
A second loan on the house gets paid off at closing, just like the first. Here's what to line up before you sell.
No obligation. No pressure. Takes about 2 minutes.
The short answer
You can sell with a HELOC or a second mortgage. Both are paid off out of the sale proceeds at closing, and the CFPB notes that when you sell your home you're generally required to pay off a HELOC in full. The work is getting an accurate payoff from each lender and making sure nothing new is drawn on the line before closing.
Step by step
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1
List every loan on the house
Check your statements for a first mortgage, a home equity loan, a HELOC, or more than one. Each has to be paid before the buyer gets clear title.
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2
Ask each lender for a payoff
Request a payoff figure good through your closing date. A HELOC balance changes if you draw on it, so the number only holds if the line stays untouched.
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3
Freeze or close the line
Tell the HELOC lender you're selling and ask how to stop further draws so the payoff is final. Ask whether your agreement has a cancellation fee; the CFPB says some lenders charge one for closing a HELOC early, usually within the first two or three years.
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4
Make sure the sale covers both
Add both payoffs to your selling costs and compare the total with the likely sale price. If the loans add up to more than the house will bring, the lenders would have to agree to take less.
Sources: CFPB: What you should know about home equity lines of credit ยท CFPB: What fees can my lender charge if I take out a HELOC?
This page explains how these loans are generally handled in a sale. It isn't legal or financial advice. Your loan agreements control, so ask each lender about your payoff and any fees.
Cash offer vs listing
Example: a $250,000 home
| Offer | $205,000 |
|---|---|
| Repairs | $0 |
| Commissions | $0 |
| Closing costs | $0 |
| You walk away with | $205,000 |
| In 7 to 14 days | |
| Sale price | $250,000 |
|---|---|
| Repairs | about $8,000 |
| Commissions | about $13,800 |
| Closing and holding | about $6,000 |
| You walk away with | about $222,200 |
| In 60 to 90 days | |
Example only. Your numbers depend on your home and market.
We'll put a cash offer next to a listing estimate, both after every loan is paid, so you see what you'd actually keep.
Frequently asked questions
How do both loans get paid at closing?
Both come out of the sale proceeds, and your settlement statement shows each payoff line by line.
Can I keep my HELOC open after selling?
Generally no. The CFPB says that if you sell your home, you're generally required to pay off the HELOC in full.
What if I owe more than the house is worth?
Then the sale can't pay both loans in full, and the lenders would have to agree to accept less. A HUD-approved housing counselor can walk you through the options.
Who are you?
We are real estate investors based in Baltimore, helping homeowners since 2016. We buy houses directly for cash. We are not a licensed real estate brokerage and do not list homes ourselves; if listing could get you more, we show you the math so you can choose.