Expert: liznarr - 7/24/2009

Question
I owned free and clear 16 acres of land on which I had (also free and clear) a mobile home in which I lived.  3 years ago I utilized the property to secure a zero down payment to have a custom home built.  When we closed on the home I included 15 acres in the closing.  ( I retained 1 acre with the mobile home that is not associated with the mortgage).  I would now like to sell the mobile home and its acre and also 7 acres that are included in the mortgage on my current home.  Essentially spliting the property in half with the goal of using those proceeds to pay off all my current debt with the exception of the mortgage to ensure that I can maintain it.  How do I go about getting the 7 acres clear to sell with the mobile home and 1 acre that I currently own free and clear?  this is in the State of TX

Answer
Hi Julia,

In order to sell a portion of the acreage you now have packaged in a mortgage with your custom home, you will need a Release from your mortgage company.

Depending on what your current mortgage balance is, and the value of your home and eight acres you want to keep, the bank will determine if there is enough value in the remaining mortgaged property to give you a Release.  Basically, all you want is a Release on seven of your original sixteen acres; but your mortgage company will need enough value in your home and remaining eight acres as collateral to justify your current mortgage balance.

Depending on value as established by a new appraisal your mortgage company will require, and possibly other circumstances, your mortgage company might require that a portion of the proceeds from your sale be applied to your current mortgage as a condition of a Release.

I would suggest contacting your mortgage company and getting the process started, because it can take a bit of time to accomplish this.  A new appraisal will need to be done, but don’t have the property appraised yourself and then contact your mortgage company as they will most likely want to order the appraisal.

If your mortgage company agrees to do this, they will prepare a Release for you, and you will then be good to go and sell the seven acres released, along with the one acre and mobile home which currently has no mortgage.

Good luck to you, and feel free to write again if you have additional questions.

Regards,
Elizabeth