Selling home, who gets the check?

If you sell your home how does it work at closing. Say the house sells for 400K but the seller still owes 425K...Do you need the banks permission to sell the house? or can you go ahead and sell and work witht he lender directly to repay the 25K in arrears. Will the check (400K in this scenario)go to you the seller or to the lien holder at closing?

I am just curious....

Message edited 2/1/2009 3:10:43 PM.

Re: Selling home, who gets the check?

I believe the $400k check gets written to the mortgagee, and then you have to write a check for the $25k to the mortgagee as well.

I think it must all be done at that time.

Re: Selling home, who gets the check?

If there isn't enough money to pay off the mortgage, the deal won't happen since the title company most likely wouldn't facilitate a closing for a property that would still have a lien on it and a purchaser wouldn't buy a home with a lien on it.

Paying less would be a short sale and something that requires approval from the bank through what is typically a long, drawn out process.

Re: Selling home, who gets the check?

In order for the house to sell at $400 you would have to write the difference to pay off your mortgage at the cloisng. If you couldn't afford to give them the $25,000 then you would have to speak to the bank prior to selliing the house and discuss a short sale. The bank then would control and have to approve the purchase price of the home.

Re: Selling home, who gets the check?

Thank you so much.