Selling Your Las Vegas Home When You Still Owe on the Mortgage

by Ryan Rose

Most homeowners selling their homes still owe money on their mortgage. That's completely normal. The question isn't whether you can sell. It's whether you'll make money or need to bring money to closing.

How Mortgage Payoff Works

When you sell, your mortgage doesn't disappear. It gets paid off from the sale proceeds at closing. Here's the process:

You accept an offer and open escrow
Your agent or escrow requests a payoff statement from your lender
The payoff amount includes principal balance plus any interest to the closing date
At closing, escrow pays your lender before you receive any proceeds
What's left after mortgage payoff and closing costs is yours

It's seamless. You don't have to pay off the mortgage yourself before selling.

Calculating Your Position

Simple math determines your outcome:

Sale Price minus Mortgage Payoff minus Closing Costs equals Net Proceeds

Example:

Item	Amount
Sale Price	$500,000
Mortgage Payoff	-$350,000
Closing Costs (8%)	-$40,000
Net Proceeds	$110,000

Request your current payoff amount before listing to know where you stand.

When You Have Equity

If your home's value exceeds what you owe plus closing costs, you're in good shape. You'll walk away with money.

The only questions are:

How much will you net?
Is it enough for your next move?
What price maximizes your proceeds?

When You're Close to Break-Even

If your equity barely covers closing costs, you might break even or need a small amount to close. This happens when:

You bought recently and haven't built equity
You made a small down payment
Home values haven't appreciated much since purchase
You've refinanced and pulled cash out

Breaking even isn't ideal, but sometimes selling is still the right choice for your situation.

When You're Underwater

If you owe more than your home is worth, you're "underwater" or have "negative equity." This is rare in today's Las Vegas market with prices near record highs, but it can happen if:

You bought at a peak and values dropped
You've borrowed heavily against the home
Your home has condition issues affecting value

Options when underwater:

Bring cash to closing. Pay the difference yourself. Painful but clean.

Short sale. The lender agrees to accept less than owed. This damages your credit and requires lender approval. It's complicated and time-consuming.

Wait. If you can afford to stay, wait for values to rise or loan balance to decrease through payments.

Rent it out. Cover the mortgage with rental income until your position improves.

Multiple Mortgages

If you have a second mortgage, HELOC, or other liens, they all get paid at closing. Your net proceeds come after all debts secured by the property are satisfied.

Make sure to account for all loans when calculating your position.

Prepayment Penalties

Some mortgages have prepayment penalties for paying off early. Check your loan documents. These are less common now but still exist, especially on some investor loans or older mortgages.

Timing of Payoff

Mortgage payoff amounts are calculated to a specific date. Interest accrues daily. If closing is delayed, the payoff amount increases slightly.

Your escrow company handles these details, but be aware that small variations are normal.

The Bottom Line

Owing on your mortgage doesn't prevent selling. It just means your lender gets paid first from the proceeds. Know your payoff amount, calculate your net, and make an informed decision about whether selling makes sense for your situation.

Want to calculate your potential proceeds from selling your Las Vegas home? Request a free evaluation and net proceeds estimate.

Frequently Asked Questions About Selling a Las Vegas Home With a Mortgage

Q1: Can I sell my Las Vegas home if I still owe money on my mortgage?

Yes, absolutely. Most homeowners still have a mortgage when they sell. Your mortgage is paid off from the sale proceeds at closing, and you receive what's left after the payoff and closing costs are deducted. You don't need to pay off the mortgage before selling.

Q2: How do I find out how much I still owe on my mortgage?

Contact your lender and request a payoff statement. Your real estate agent or escrow company can also request this on your behalf once you open escrow. The payoff amount includes your principal balance plus any interest accrued through the closing date.

Q3: What happens if I owe more on my mortgage than my home is worth?

This situation is called being "underwater" or having negative equity. Your options include bringing cash to closing to cover the difference, pursuing a short sale with lender approval, waiting for home values to increase, or renting out the property until your equity position improves.

Q4: How much equity do I need to sell my home in Las Vegas?

Ideally, you need enough equity to cover your mortgage payoff plus closing costs (typically 8-10% of the sale price). If you have less, you may need to bring money to closing. Calculate your position by subtracting your mortgage balance and estimated closing costs from your home's current market value.

Q5: Who pays off my mortgage when I sell—me or the buyer?

The escrow company pays off your mortgage using funds from the buyer's purchase payment. This happens automatically at closing. The buyer pays the purchase price, and escrow distributes that money to pay your lender first, then closing costs, and finally any remaining proceeds go to you.

Q6: What if I have a second mortgage or HELOC on my Las Vegas home?

All liens secured by your property must be paid off at closing, including second mortgages, HELOCs, and any other loans. Make sure to account for all these debts when calculating your net proceeds. Your escrow company will obtain payoff statements for all liens on the property.

Q7: Will I be charged a prepayment penalty for paying off my mortgage early?

Most modern mortgages don't have prepayment penalties, but some do—especially older loans or certain investor mortgages. Check your original loan documents or contact your lender to confirm. If a penalty exists, it will be included in your final payoff amount.

Q8: How long does it take to pay off my mortgage after selling?

Your mortgage is paid off on the closing date. The escrow company sends the payoff amount to your lender immediately after closing. It typically takes 7-10 business days for the lender to process the payment and release the lien, but you're no longer responsible for the debt as of the closing date.

Q9: Can I sell my Las Vegas home if I just bought it recently?

Yes, you can sell at any time, but you may have limited equity if you bought recently. You'll need to account for your remaining mortgage balance, closing costs, and any transaction costs from your original purchase. Some sellers in this situation break even or need to bring cash to closing.

Q10: What are typical closing costs for sellers in Las Vegas?

Sellers typically pay 8-10% of the sale price in closing costs, which includes real estate commissions (usually 5-6%), title insurance, escrow fees, transfer taxes, and other miscellaneous costs. These costs are deducted from your sale proceeds along with your mortgage payoff.

Q11: How do I calculate my net proceeds from selling?

Use this formula: Sale Price minus Mortgage Payoff minus Closing Costs equals Net Proceeds. Request a payoff statement from your lender, get an estimate of closing costs from your agent, and subtract both from your expected sale price to determine what you'll walk away with.

Q12: What if my closing date gets delayed—does my mortgage payoff amount change?

Yes, slightly. Mortgage interest accrues daily, so if closing is delayed, your payoff amount increases to account for the additional interest. Your escrow company handles these adjustments automatically and will request an updated payoff statement if needed.