Selling a property "subject to" provides several key advantages, particularly when equity is low. This approach can offer sellers more cash upfront from the buyer than they would receive from their equity, while also freeing them from the responsibility of future mortgage payments. It helps improve the seller's credit as the buyer continues to make timely payments and ensures a guaranteed sale, avoiding the complications often associated with traditional sales. Overall, it's a straightforward solution that offers financial relief and peace of mind for the seller.

For buyers, purchasing a property "subject to" offers several distinct advantages. They do not need to qualify for a new loan or go through an approval process, making this an ideal option for those with less-than-perfect credit. Additionally, buyers can move quickly, acquiring the property without the delays typically associated with traditional financing. This method provides a faster, more accessible path to homeownership, allowing buyers to bypass many of the barriers that could otherwise prevent them from purchasing a home.

Yes, "subject to" transactions are legal across all fifty states. Real estate attorneys can help close these deals, providing guidance to ensure everything is handled properly.

If the buyer stops making payments in a "subject to" transaction, the seller, much like a bank, would reclaim the property. The seller keeps all the buyer's invested money, including the down payment and any equity built through monthly payments. They gain immediate access to the property and can quickly resell it. By then, the home's value may have increased due to the equity accrued and potential appreciation, providing an additional financial benefit to the seller.

No, not all attorneys understand "subject to" transactions. Attorneys, like doctors, specialize in different areas, and even real estate attorneys may lack experience with creative investor strategies. It's essential to consult with an attorney experienced in these types of deals, as those without experience may advise against them due to potential liability concerns.

Similarly, most real estate agents are not familiar with "subject to" transactions since they are not taught in real estate school and often have a negative view simply because they don't know how to handle them. For this reason, working with agents can complicate the process and create additional challenges for the seller.

In a "subject to" transaction, the deed transfers to the buyer, giving them ownership of the property. The mortgage stays in the seller's name, and the buyer takes over the mortgage payments.

The exact timing of when the mortgage will be out of your name is uncertain; it could be a week, or it could be at the loan's maturity date. However, buyers often refinance when interest rates drop below the rate of the existing mortgage.

Yes, you will be able to qualify for another loan. We make all monthly payments through a servicing company that keeps a record of each payment. This payment history is shared with your new lender as proof that the mortgage is being managed, which will reduce the impact on your debt-to-income ratio. For those with VA loans, it ensures that your entitlement remains intact, allowing you to secure a new loan without disqualification.

Renting the house out can be challenging, especially when equity is low. With low equity, your monthly mortgage payments are often higher than what you could realistically charge for rent, making it difficult to cover costs. Additionally, renting comes with the burdens of managing tenants, handling repairs, and maintaining the property, which can be both time-consuming and costly. This often leads to financial losses rather than gains, making a "subject-to" sale a more attractive and less stressful option.

The due-on-sale clause allows a lender to demand full repayment of a loan if the property is sold or transferred without their consent. In "subject to" deals, where the buyer takes over the seller's existing loan, this clause is rarely enforced as long as payments are made on time. If it is called due, it can always be resolved by altering the paperwork to satisfy the lender's requirements.

In a "subject to" transaction, there's no need to notify the lender because they are generally content as long as payments are made on time. Lenders prefer avoiding the hassle of foreclosures, so they typically don't interfere. If approached for approval, they often decline, aiming to secure higher interest rates on new loans. By continuing regular payments without involving the lender, the process stays smooth and favorable for everyone involved.