Seller is on title, not on mortgage. Mortgagor died last year, removed from title. Mortgage company has not been notified.
Buyer is investor offering subject to mortgage. 525k purchase price, seller nets 18k at closing and 500 a month for 10 years then balloon payment of 60k.
Mortgage is 462k.
Up and up or shady ?
If the mortgage company doesn’t know and isn’t 100% on board with what you are doing I wouldn’t do it
Hard pass on any of these “subject to” purchases.
Seller assumes too much risk. Either the buyer can make seller whole at closing or they can’t. If they can’t, move on.
Are you assuming a 2% loan or a 7% loan. The only factor that matters essentially
Cedar said:
Are you assuming a 2% loan or a 7% loan. The only factor that matters essentially
They are not assuming a loan - they are “buying” the property “subject to” the current mortgage.
OP - there is a good chance the lender will call this loan due, assuming there is a due on sale clause. This sounds shady. You should have an attorney, they can see if the lender will approve this, which is doubtful unless you’re assuming the loan/
@Beck
Same thing, my friend. Assuming a loan or buying subject to existing loan means the same.
Cedar said:
@Beck
Same thing, my friend. Assuming a loan or buying subject to existing loan means the same.
It does not; they are completely different things. The former is agreed to by the lender/servicer and transfers who is obligated to repay the note and abide by the security agreement from the original mortgagor(s) to the new buyer(s). The latter violates the terms of the note and security agreement and will potentially result in the note being called due.
Cedar said:
@Beck
Same thing, my friend. Assuming a loan or buying subject to existing loan means the same.
It’s not the same thing. Assumption implies the bank allows it and makes the assumer obligated
@Keir
Would you agree that in a sub to transaction and an assumable mortgage, the buyer is continuing to make the original payment the seller had when they purchased?
We can put an asterisk on it though
@Cedar
Yes I agree based on the commonly accepted definition of words, buyer is assuming the mortgage in both cases
Technical industry definition is different
@Cedar
There is no asterisk, they are two different things.
Beck said:
@Cedar
There is no asterisk, they are two different things.
I’ll keep the asterisk
You do you but it doesn’t make you right, lol.
Cedar said:
@Beck
Same thing, my friend. Assuming a loan or buying subject to existing loan means the same.
Not the same thing, they are in fact completely different.
Something doesn’t sit right with that.
What is the true value of the house. When this deal closes, you are the 2nd mortgage. This means you are 2nd in line if anything goes wrong with the investment, you take the hit, not the Bank and not the investor.
They are taking all of the upside with little to no risk (18k). I had so many friends who lost tons on their house in 07/08. 10 people in our neighborhood sold to the same person. The buyer offered 10 to 15% over asking as long as the seller financed their equity they had in their house, plus extra 10 to 15%,
Buyer put renters in those houses, and when market went south he fought the foreclosure for over 6 years. Most never got a penny of the portion they financed.
Never a good idea to let someone buy subject to the mortgage. Seller gets screwed most of the time
Hard pass…sounds like you are not getting an insured title and if the mortgage holder gets wind of it, they could call it due or force it into probate. Very sketchy