Can I sell a house while paying off the mortgage?
Let's say I have saved up $30,000 and I put down 10 percent on a house that costs $200,000. I will have a 30-year mortgage with 5 percent APR and let's say my monthly payment would be $1,000. If I keep the house for two years, I will have made 24 monthly payments plus the down payment so I have put $44,000 into the home. There would be $156,000 left on the mortgage. If I list the house and find a buyer that will pay $250,000, the mortgage needs to be settled, which would leave a remaining $94K. The remaining $94,000 from the sale would be mine, right? Of course I am excluding all additional taxes, lawyer, and realtor fees for the purpose of this theoretical scenario. Would I be able to sell a home after only owning it for two years? How difficult is this process? Did I forget any key details that would cost lots of money and cause me to go into financial debt? And approximately how much would all additional fees from the initial purchase of the house to the resale and accumulative over two years be?
A couple of comments: First of all, most of your $1,000 monthly mortgage payment will go to pay interest on your loan. At 5% per year, interest on a $180,000 mortgage will be $9,000 per year. So you will only pay off about $3,000 in principal per year. At the end of two years, then, your equity in the house will be the total of the $20,000 down payment plus $6,000 in principal payments. So if you could sell at $250,000 your profit would be $250,000 less $174,000, or $76,000, less closing costs. Make sure you live in the house for at least two years. If the house has been your primary residence for at least two years you will not owe capital gains taxes, so your profit will be $76,000 less closing costs.
However, this is all hypothetical. It's unlikely that a house would appreciate by 25% in just two years unless you did some (costly) work on it. Don't get your hopes up.
Sounds like you have it covered. Yes, with the home proceeds, the mortgage is paid off at closing along with the realtors commission, and other of other smaller fees, like transfer fees, attorneys fees, title insurance. Here is a link to a useful checklist of closing costs: https://thelendersnetwork.com/cost-of-selling-a-house/.
One other thing for you to consider however is taxes. In the above example, if the home is your primary residence and you have occupied the residence for two of the last five years and you are single you will pay no capital gains tax on the first $250,000 you make when you sell your home. Married couples have a $500,000 exemption. Here is an article with more infomation on home sales and capital gains tax: https://www.investopedia.com/ask/answers/06/capitalgainhomesale.asp