Yes. Most home sales, cash or otherwise, involve paying off an existing mortgage at closing directly from the sale proceeds — you don't need to pay off the loan yourself beforehand. The title company handles the payoff as part of closing, and you receive whatever equity is left over.
How the payoff actually works
The title company requests a payoff statement from your lender showing the exact amount owed as of the closing date, pays that loan off directly out of the sale proceeds, and sends you the remaining balance. This happens automatically as part of closing — there's no separate step where you need to contact your lender yourself first.
What if you owe more than the house is worth?
If you're underwater — the loan balance is higher than what the house will sell for — the sale becomes what's known as a short sale, which requires your lender's approval since they're agreeing to accept less than they're owed. It's more paperwork and typically takes longer, but it's a well-established process, and a cash buyer can still work with you and your lender through it.
Behind on payments or heading toward foreclosure?
If you're behind on payments, a cash sale can often move fast enough to close before a foreclosure filing or auction date, which protects your credit and lets you walk away with whatever equity remains instead of losing it. See how we help homeowners facing foreclosure for more on that timeline specifically.
This is general information, not legal or financial advice. If you're behind on payments or owe more than the home is worth, a conversation with your lender or a real estate attorney can help you understand your specific options.