You can still sell your house even without paying off your HELOC; however, you’ll have to pay your HELOC balance from the profit you make from selling your house. This means you may not have enough profit after selling your home and paying back off your HELOC.

A home equity line of credit (HELOC) gives you the advantage of borrowing against the equity in your property. Having a HELOC doesn’t stop you from selling your house. This article will explain all you need to know about selling a home when you have a HELOC. Continue reading to know more:

Do You Have To Pay Off A Heloc When You Sell Your House

What Happens When You Sell Your Home With a HELOC?

HELOCS have two parts; the part where you can withdraw money up to your credit limit (it’s called the draw period) and the part where you repay your HELOC balance including the balance and the interest.

Most homeowners do not have a problem with selling a house with a HELOC. But note that selling your home before paying off your HELOC doesn’t mean you’ve escaped payment; you’ll still have to pay it back later.

After selling your home successfully, you’ll be required to pay the balance of your HELOC out of the profit you make from selling your home. You’ll also need to clear off any other debt from your mortgage. Paying off your HELOC isn’t supposed to be a problem except you didn’t make enough profit from the sale of your home.

What Are The Downsides Of Selling With A HELOC?

You can sell your house while having a HELOC, however, there are times when it can be a problem: these scenarios include

  • The home is depreciated 

If your home has been able to gather enough value over the years, you don’t need to worry about depreciation. However, if your home has lost value, you may not be able to pay back your HELOC after selling your home. You may have to pay the balance out of your fund or wait till the home appreciates before selling.

  • Your lender charges fees

Some lenders charge termination fees if a borrower fails to repay their HELOC according to the agreed mode of payment. Paying off your HELOC in full may deprive the lender of getting their profit through interest payment, so alternatively, they charge termination fees or prepayment penalties.

  • You’re over-extended

Your HELOC and mortgage loan balance will be deducted from the profit you make after selling your house. If your HELOC balance is huge, ensure you sell your home at the best price so you can repay your HELOC and afford your next house.

Do You Have To Pay Off A Heloc When You Sell Your House 2


Taking out a HELOC has its benefits, however, you should also take note of its downsides. Ranging from early repayment, termination fees, high closing cost, and the risk of losing your home if you’re unable to repay your HELOC.

If you want to make more profit when selling your home, you should sell to a cash house buyer. A cash house buyer is ready to pay for your house immediately and close the sale of your house fast. At Home Cash Guys, we’re reliable cash house buyers and we buy houses Philadelphia at the best price. You can count on us to give you the best price for your home.

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