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K " Buying "Subject to"
4
There are different meanings to the phrase `'subject
4 to", such as a clause in a real estate agreement: "subject
, #0 %
' to buyer's inspection", or "subject to partner's
#(% %
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#$ % % #0 % %
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But in this particular scenario we are referring to a
B
low to no money down and no credit strategy. For real
8 estate investors, the most common use of the term
"subject-to" or “Sub-2” refers to purchasing a property
“subject to the existing financing”.
This strategy leaves the existing financing in place
B
and the investor just takes over the original owner’s
; payments.
YOU ARE NOT ASSUMING THE LOAN. This is
where people get hung up. You are not assuming a loan.
B
Look, I haven’t seen a loan that’s assumable in I
don’t know how long. Anyway, even if you find one
that is, it would also have to be non-qualifying for you
; to just assume it without your credit and qualifying for
it to assume the loan. So to be clear, you are not
H C assuming anything. You are simply agreeing to make
the seller’s existing mortgage payments. The seller’s
name stays on the loan, you just pay it.
Please don’t tell me it’s illegal. Take a look at line 203
, on the HUD1 form, which says “Existing Loans Taken
Subject To.”
07J 0 73
% %
Anyone can make a private contract to buy or sell a
property. You will have the deed in your name; the seller
will still have the loan in theirs.
,
M This type of strategy does have some nuances depending
on the state you’re in. Nothing a hundred dollars and a lunch
with a lawyer won’t take care of. Always send the question
to the lawyer first though…then buy lunch only if he has the
answer
$5& <