Yes, in most cases you do need to pay a penalty. The penalty is different for each bank. The usual scenario is when a ban would charge you 3 month mortgage interest which is about $1000 for every 100,000 borrowed. So if your mortgage is 400,000 you would be paying close to 4000$ in penalty to break the mortgage. If you sold your house and planing to buy another one, you should talk to you bank to see if they will be able to move the mortgage to another property which is called "porting". If the mortgage you require is bigger you can reapply to get a higher mortgage and could have a blend mortgage where your additional amount has a different rate then the original mortgage.

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Hi, to buy new house i took heloc against my old house which i planned to sell shortly to pay off heloc. i could not sell my old house so i am using it as rental property now. i want to convert heloc into fixed rate secondary mortgage. if i convert heloc into fixed rate mortgage, when i sell my rental property will the money from sale be transferred to my primary mortgage company without lump sum distribution to avoid tax penalty? thank you

You might be able to convert the heloc, but two items, one the rate on home equity loans are usually high, and two, home equities are tougher to come by, especially on a rental property. you could look into locking the rate like mary suggested, it depends on the lender and when you took out the heloc as the lock in feature has only been around for a few years. If you sell the rental, any proceeds will be given to you, other arrangements I would consult the irs or a cpa. you may want to look at bank of america for the home equity, I was just talking to a broker contact of mine and she claims they are doing home equities still, best of luck

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My home is over 194k; i refinanced, w/ the help of my best friend. the loan is now over 212k, the house has been apraised for 230k. as of 6/2008, their will be 40k of equity available. i would like for an investor/buyer to take possession of the home, continue to pay the mortgage and give me 30k, leaving them w/10k of equity. i will give them gift of deed & they can sell or rent out the home. we refinanced in 6/2006, so if the house is sold before 6/2008 than a 2% penalty will apply. i wil move out as soon as the investor agrees to my 30k and contracts are signed. i do not wish to have any further compensation. the 30k will help for relocation of myself & family & paying off debt. the real estate agent that originally sold me this home stolel 20k from me; atty fees & closing cost was put into the new loan. the mortgage is 1500 monthly, this was fine, but my hrs @ work have decreased & i before it gets critical, i would like to be out of the situation. is option possible? thank you.

Well, when was the appraisal done, as appraisals do have a shelf life. If the appraisal is more than a year old, it is not worth the paper it is written on. Your post is very complex, although you seem to have it all figured out in your mind. Investors are interested in CAP rate, how much it will make them. That a realtor stole 20k from you seems strange. Attorneys fees and closing costs are typical to be put into a loan. You can't "gift" a deed, you have issues to settle on who holds the note. And you are speculating on how much equity will be available. You have so many things going on here, and you are running on speculation of what the market will do. You should offer the property for sale and take your chances. Do a FSBO, this sounds right up your alley.

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Since most of my mortgage payment goes toward interest, should i not make my payment by the due date (dec. 16th), and incur the late penalty, then if the closing is a couple weeks later, i would be paying off the loan anyway? does this make sense? or once the payment is past due, would the interest still be part of my final payoff? we have not set a closing date yet, but it should be before the end of the month. i assume the payoff is due at closing right?

You need to make the payment otherwise the late payment will go on your credit report. At closing, the buyer will pay you back for part of the payment since it applies to a month when you are no longer living in the house.

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Recently i was approved for a loan of 180k on a 189k house. if i live in it for over a year and sell it, do i have to pay off the entire 30 year finance charge of 280k? or am i typically only responsible for the years ecrued interest plus any prepayment penalty and taxes, fees,insurance, etc? i can't find any info on this anywhere. please only serious answers who know about home mortgage finance.

Generally, you only have to pay the interest accrued so far. There may be a prepayment penalty or other fees, which you can learn about by reading your mortgage contract.

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I have a 2yr prepayment penalty and we did 100% financing when we bought the house. my husband commutes over 50 miles oneway to work and i am looking for work and his paycheck barely pays the mortgage and we don't have enough left over for the other bills. should we sell the house or rent it out. our mortgage payment is $4100/month we have a 5br 4ba house with 3300sqft.

Sell it.You will not be able to afford the taxes at the end of the year.

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We split in sept. he moved out in dec. we have joint mortgage and he pays nothing toward anything, he refuses 2 sell as we will have to pay penalties for selling early. everything comes out of my account and i am really struggling at the moment. i worry that when house is sold in future he will be entitled to half even though i haven't received a penny from him. i dont think this is fair. i mentioned transferring mortgage into my name as he says he wants out but there is a £260 administration fee which he is refusing to pay half of and i cant afford it on my own. we only bought the house july but things went drastically wrong between us. does anyone have any advice.

I recently was involved in a very similar situation. Unfortunately as far as I was informed, the only way out is to have your ex partner's name removed from the mortgage. The costs associated with this are ridiculous ("admin" fee for the lender and also solicitors fees) but it does seem to be the only way out. If his name stays on there you will need his permission to sell and he most likely will be entitled to a share of any profit. Also the cost associated with selling and moving again are prob far higher then the mortgage change charges. I was very lucky in that my parents are very supportive of me and they have lent me the money for my fees, as similarly now I am covering all the mortgage and bills I am very limited on funds. I will not be able to pay them back for a while, but they have understood that through this gesture they are helping me stay in my own home and on the property ladder . I wish you the best of luck. (PS, don't know where you are BTW, but I'm from the UK)

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What is the penalty if you sell your house at a price to pay off the 1st mortgage but isn't enough to pay off the 2nd mortgage (home equity line)?

You must pay off both mortgages in order to deliver the home to the buyers with clean title. You will have to come to closing with cash to cover the difference. If you cannot, you can petition your lender for a "short payoff". If you do this, you'll have tax ramifications, and it will negatively affect your credit, but it might be worth it to you.

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I bought my first house in december 2006 jointly with my husband. after having redeveloped the property, we would now like to sell the property on and make a nice profit on the sale of this house. however, birmingham midshires state that there will be an early redemption penalty of around £11000 to pay, should the mortgage be repaid within the first two years (i.e. prior to december 2008). does this early redemption penalty still apply if we wish to continue to use birmingham midshires as our lender and if we wish to continue to use the same mortgage deal as we presently do and the new mortgage is the same value as the amount we presently owe? any suggestions appreciated! thanks!

There shouldn't be a charge as what your wanting to do 'porting'. This is basically where you sell your current house and move the product to the new property . The redemption charge only applies when you're literally paying off your mortgage by remortgaging or paying it off by other means. This isn't the case from what you've said. Hope this helps xx

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I have been living in my moms house, paying the mortgage (up-to-date) since she divorced my step-dad, decided she didn't want anymore responsibility & moved out. when i got the tax statement, i find she is 2 yrs behind. total with penalties & interest including this year is over $9k. what should i do? if i start paying it will be $1800 down and payments of $550 a month. the house is about 8 yrs old and valued at about $88k. the balance on the note is a little over $40k. in this market i don't think it will sell for more than $70k, if that. we have had no contact with my ex stepfather but i'm sure my mom will sign off. both of them have bad credit already, mine is not so good. is it worth paying $9k in back taxes? advice please? yes i realize that the taxes will come out of the sale. thanks for answering! the taxes are for county, city and school and all that good stuff. it would normally be a little over $2k a year combined. it that alot?

If your choice is selling yourself or letting it be sold by the city for back taxes, sell yourself, you'll get a better price. If your choice is to pay the taxes and live there or sell and live elsewhere , you're probably better off to pay the taxes. You'll still have $21,000 equity, probably more than you'll have if you try to sell in a hurry, and you can wait until the market improves before selling. Remember, even if you sell, you're looking at paying rent and/or another mortgage, better to stick with what you have. You can also look into refinancing the mortgage, and rolling in the value of the back taxes, which will reduce your monthly costs but increase overall cost (you'll be taking much longer to pay off that additional debt). No matter what you do, though, you need something from your mom about who owns what. Without it, you're paying off mom's debts but gaining NO legal rights. Without being judgmental, it sounds like an unstable family situation, and if something bad happens (like mom being sued for other debts), you could be kicked out with nothing to show for all your input. If you can't get mom to sign the place over to you, or partially given the current equity, you should walk away, and let her sell out. By the way, $9k taxes over 2 yrs on an $88k home? Wow, glad I don't live there.