Some myths block what otherwise would be a terrific deal while others would have you believe that a bad deal is actually terrific. Here is an example, we encourage purchasing homes subject to the existing mortgage as an option of financing the purchase of an investment property.

This means that title to the property is transferred to the purchaser, but the loan remains in the original borrowers name with payments made by the purchaser.
Unfortunately, many myths exist around this method that could rob you of your profits. This is an excellent method to purchase wholesale investment properties with out using little or none of your own money. I personally aquire Chicago wholsale deals and invetment real estate this way. This is a great exit stratagy for your wholesale properties as well.

Here are a few thoughts about what some folks believe and what they might want you to believe as well. For example.

First: Buying A House Subject To The Existing Mortgage Is Illegal.

Wrong! When you purchase a home subject to it means subject to the terms of the currently existing note in the name of the seller.
Keep in mind, most mortgages have a due-on-sale clause which says that if the house is sold without paying off the mortgage, the lender has the right to call the whole loan due.

Read this again,
they have a right not an obligation. Its their (the banks choice. Several attorneys who represent lenders were asked if they had ever heard of a bank calling a loan due because of a sale. In most instances they said not as long as the payments were made on time.

Why?

Because banks are not in the business of foreclosing on properties to take possession of the real estate. They are in the money business. Please understand that the job of a lender is to collect payments. They loan out money at a higher interest rate then they are paying and create their cash flow from the difference on that spread.
If they call the loan due, and it goes into foreclosure, they have a non-performing loan on the books (which requires them to have to increase their reserves), they incur additional costs, and they are stuck with a property they do not want. Both are circumstances they would have to accountable to with their board. Not a pleasant circumstance for that branch manager. The alternative, they can just
accept the payments from the new owner. which one makes more sense?

Second: Buying a house subject-to is complicated and requires a enormous amount of Paperwork. The reality is that all you have to do is write it into a contact, a Purchase and Sales Agreement. Just write it in right next to the Purchase Price.

The contract should say something like this:
Total purchase price to be paid by buyer is xxx, payable as follows: subject-to existing first mortgage with a balance of approximately xxx, and monthly PITI payments of XXX; the remainder of sellers equity to be paid in cash at closing

Thats all there is to it and you are done, it is that simple.
The seller and buyer have now agreed that their house will be bought subject-to the sellers existing mortgage. The buyer must, as a precaution, have the seller sign a disclaimer that they know that the loan has a due-on-sale clause, and that the Buyer makes no promise as to when the loan will be paid in full, or how long it will remain in their name.

Buyers should also prepare a letter from the seller informing the bank that all future correspondence should be forwarded to the buyer, and that the buyer has the right to act for the Seller in every way
regarding the loan so theyll disclose loan information to the Buyer in the future.

Now isnt that simple. After closing, the buyer just starts making the payments. We the buyers dont hide our identity. We send in our own checks, and the house insurance is in the buyers name.
Now youre ready to try this strategy. Make sure you consult with a qualified attorney as your circumstances warrant.

One of the things that disturbs me about our real estate diligence is the number of inaccurate or incomplete information attainable to investors.

Some myths block what otherwise would be a marvelous deal while others would have you trust that a bad deal is actually terrific. Here is an example, we encourage purchasing homes subject to the existing mortgage as an option of financing the purchase of an investment funds property.

This means that title to the property is transferred to the purchaser, but the loan remains in the master copy borrowers name with payments made by the purchaser.
Unfortunately, many myths exist or so this method that could rob you of your profits. This is an excellent method to leverage wholesale investment funds properties with out using footling or none of your own money. I personally aquire Michigan wholsale deals and invetment real estate of the realm this way. This is a great exit stratagy for your wholesale properties as well.

Here are a few thoughts about what some folks believe and what they might want you to believe as well. For example.

First: purchasing A House subject area To The Existing Mortgage Is Illegal.

Wrong! When you purchase a home subject to it means subject to the terms of the currently existent note in the name of the seller.
Keep in mind, most mortgages have a due-on-sale article which says that if the house is sold without paying off the mortgage, the lender has the right to call the whole loan due.

Read this again,
they have a right not an obligation. Its their (the banks choice. Several attorneys who correspond lenders were asked if they had ever heard of a bank calling a loan due because of a sale. In most instances they said not as long as the payments were made on time.

Why?

Because banks are not in the business of foreclosing on properties to take possession of the real estate. They are in the money business. Please understand that the job of a lender is to collect payments. They loan out money at a higher interest rate then they are paying and create their cash flow from the difference on that spread.
If they call the loan due, and it goes into foreclosure, they have a non-performing loan on the books (which requires them to have to increase their reserves), they incur additional costs, and they are stuck with a property they do not want. Both are destiny they would have to accountable to with their board. Not a pleasant circumstance for that leg manager. The alternative, they can just
accept the payments from the new owner. which one makes more sense?

Second: Buying a house subject-to is complicated and requires a enormous amount of money of Paperwork. The realism is that all you have to do is write it into a contact, a Purchase and Sales Agreement. Just write it in right next to the leverage Price.

The foreshorten should say something like this:
Total leverage price to be paid by buyer is xxx, payable as follows: subject-to existing first mortgage with a Libra the Scales of approximately xxx, and monthly PITI payments of XXX; the remainder of Peter Sellers equity to be paid in cash at closing

Thats all there is to it and you are done, it is that simple.
The marketer and buyer have now agreed that their house will be bought subject-to the sellers existing mortgage. The buyer must, as a precaution, have the seller sign a disclaimer that they know that the loan has a due-on-sale clause, and that the Buyer makes no promise as to when the loan will be paid in full, or how long it will stay in their name.

Buyers should also set up a letter from the vender informing the bank that all future correspondence should be forwarded to the buyer, and that the buyer has the right to act for the vender in every way
regarding the loan so theyll discover loan information to the Buyer in the future.

Now isnt that simple. After closing, the buyer just starts making the payments. We the buyers dont hide our identity. We send in our own checks, and the house insurance is in the buyers name.
Now youre ready to try this strategy. Make sure you consult with a qualified attorney as your circumstances warrant.

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