Buying A House Subject To
Real Estate Mortgage
If you have heard about buying a house subject to real estate mortgage and are looking for more information you have come to the right place.
It's not easy to find information about this simple but relatively unknown real estate investing technique because not many people know about it. It is not as complex as it seems but there are a few things you must know.
Buying subject to the real estate mortgage is nothing more than taking title to a property and leaving the existing financing in place. The mortgage stays in the name of the homeowner and you pay their payments for them.
Not all homeowners agree to this as you may imagine, but for a homeowner in a real bad situation such as foreclosure, this is a great way to sell a house fast.
Homeowners must be aware of predatory investors that will take title to their property and stop paying payments. This can lead to the property being foreclosed on while the investor collects rent and walks away. While this is not common, it can happen and homeowners are encouraged to be cautious.
It should be noted that I am referring to this process as subject to real estate mortgage for the sake of you finding this page via a search engine. It is commonly referred to as "subject to".
Here are a few myths about the topic:1. It's illegal. Wrong. Taking over someone's mortgage payments is perfectly legal.
2. A homeowner will never agree. I can tell you from personal experience that homeowners will agree if you explain it correctly and if they are in a motivating situation.
3. The bank will call the loan due. This is highly unlikely. Many banks do have a "due on sale" clause that states the mortgage must be paid when title is transferred but ignoring is not illegal and in fact they won't know.
The final point about the "due on sale" clause should be explained further. The only way a bank would know if the title was transferred is if you call them and tell them, or if they browse your counties public records on a weekly basis. These scenarios are not likely to happen especially considering the state of the current real estate market. If you pay the mortgage, the bank doesn't care where it is coming from.
Buying a house subject to the real estate mortgage in place is a great way to beat the current credit crunch and buy a house with no money down.
Real estate investors that were once able to get financing as needed are now running into problems. Many investors are self employed and as banks tighten up their lending requirements, loans for the self employed are now nowhere to be found. Buying real estate subject to the existing mortgage is a great alternative to a traditional mortgage and will become more and more popular in the near future.
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