Definition
A mortgage is a loan secured by real estate, meaning you borrow money to buy or refinance a home and the lender records a legal claim against the property until the loan is fully repaid. Miss enough payments, and the lender has the legal right to foreclose in order to recover what's owed. When you eventually sell, whatever balance remains on the mortgage is paid off directly from your sale proceeds before you receive anything yourself. For most homeowners, understanding their current payoff amount is one of the first steps in deciding whether and how to sell. Interest accrues over time based on your rate and remaining balance, which is why getting an accurate, up-to-date payoff quote from your servicer matters more than just checking an old statement. Selling with an outstanding mortgage is extremely common and rarely causes complications as long as there's enough equity to cover it.
Example
Priya sold her home in Denver for $300,000 while still owing $212,000 on her original 30-year mortgage. A few weeks before closing, she requested an official payoff statement from her loan servicer to get the exact amount owed through her anticipated closing date, since interest accrues daily. On closing day, the title company wired the full $212,000 directly to her lender to satisfy the loan and recorded the lender's release of its claim against the property. Priya double-checked her final numbers a day later and confirmed the payoff had posted correctly with her servicer. After subtracting the payoff, standard closing costs and a small prorated tax credit, Priya received the remaining balance of just over $80,000, wired to her bank account the same day her deed recorded.