Here's What Happens if You Move Before Your Mortgage Is Paid Off

Many people sign a mortgage with the intent to pay it off over 30 years. But a lot can change in three decades. There may come a point when you feel you're ready to move, whether for a job or a change of scenery. And you may want to move to a new home before your mortgage is paid off in full.

But one thing you should know about a mortgage is that you're obligated to pay it until your loan balance gets down to $0. So regardless of whether you've moved or not, if your mortgage isn't paid off, you need to keep making payments until you no longer have an outstanding balance.

When you want to move mid-mortgage

Just because you've taken out a 30-year mortgage doesn't mean you're obligated to stay in your home for 30 years; you're free to move at any point. But the balance on that mortgage remains your financial obligation until it's whittled down completely.

Now, it's common for people who want to move mid-mortgage to simply sell their homes and use the proceeds from a sale to pay off their loan balances in full. So that's a route you could look to pursue.

Another option may be to move out of your home but keep it and rent it out. You may want to do this if your home has lost value since you bought it and you don't think you can sell it at a high enough price to cover your remaining mortgage balance in full. First, though, you should check your mortgage paperwork or even contact your mortgage lender to see if renting out your home is allowed while you still have a mortgage.

You'll also want to make sure you're able to collect enough money in rent to keep up with those loan payments, not to mention your other housing costs associated with that home, like property taxes.

You should also know that if you decide to move to a new home, you'll need to apply for a new mortgage on it if you can't cover its cost in cash. You can't transfer an existing mortgage from one home to another.

Not paying your mortgage could have consequences

When you stop paying your mortgage, a number of bad things could happen. For one thing, even a single missed payment could have a negative impact on your credit score. From there, it could become very difficult to borrow money when you need to.

What's more, if you stop paying your mortgage altogether, your lender could eventually force the sale of your home to get paid what it's owed via a process called foreclosure. When that happens, you lose the right to your home and your credit score sustains severe damage. So if you're looking to move and not sell your home, you should absolutely make a plan to continue paying your mortgage.

When you sign a loan for any reason, you're generally required to pay it back. You might, for example, borrow money to go to college but not finish your degree. But that doesn't let you off the hook for the money you've already borrowed. Similarly, when you sign a mortgage, you're making a commitment to repay the sum you've borrowed.