How Does Subject-To Benefit You?

1. We take full responsibility for all mortgage, insurance, PMI payments, and any upkeep linked to the property. The seller is excused from any maintenance or repair tasks. All these duties are transferred to the buyer.

2. This arrangement can enhance your credit status when payments are consistently made on time. As the mortgage remains in your name and every serviced payment is reported to the credit bureaus, your credit stands to gain directly.

3. Say goodbye to the need for bank procedures or appraisals that often delay the closing process.

Is Subject-To Legal?

Yes! In the closing statements that get distributed at the end of every real estate transaction, there is actually language and placeholders in there for loans getting taken over using subject-to. These transactions happen every day and you can verify on line 203:

https://www.hud.gov/sites/documents/1.PDF

Watch this video: Buying Subject To Existing Loan is LEGAL!


A "subject-to" transaction refers to purchasing a property while keeping the underlying mortgage intact, essentially assuming responsibility for the existing mortgage. The term "subject-to" is mentioned on HUD statement lines 203 and 503, signifying that we are acquiring the property subject to the existing mortgage terms.

Despite its long history, some seasoned investors and brokers may not be familiar with the subject to strategy, and may raise concerns about its legality. However, the IRS recognizes and acknowledges the subject-to strategy.

How Will this Affect My DTI (Debt-to-Income) to Buy Another Property?

We work with licensed service companies that will contact your bank to provide proof that the payment is being assumed by another party, therefore enabling your lender to remove it from your DTI.

How am I protected?

The seller is protected by a document called a Deed of Trust or Recorded Mortgage Deed (depending on State) and Promissory Note enforced by the closing Title Company. These are legal documents that allow a borrower to transfer the ownership of their property back to the original owner to avoid lengthy foreclosure and lawyer fees. This document is completed at closing and drafted by the Title Company.

Do you make payments to me, then I pay the mortgage?

No, we want this to be as painless as possible. We will pay for a loan servicing company to service our agreement.
A loan servicing company is a third-party entity that manages loan-related tasks such as collecting payments, sending statements, and ensuring that the borrower stays up to date on their payments. This helps the seller have peace of mind, knowing that their investment is being professionally managed.

What happens if you stop paying?

The seller is protected by a document called a Deed of Trust or Recorded Mortgage Deed (depending on State) and Promissory Note enforced by the closing Title Company. In the highly unlikely event that we are unable to make payments, the property would be transferred back to the seller through the Deed of Trust or Recorded Mortgage Deed (depending on State). This means that the seller would keep all the funds we’ve paid so far and regain possession of the house - seller could then sell it again or keep the property if they'd like.

What if my mortgage has a due-on-sale clause?

The due-on-sale clause allows the bank to request full repayment of the loan if the property is transferred. However, in practice, banks are primarily concerned with receiving their payments on time. As long as the mortgage remains current, lenders rarely enforce this clause. Additionally, we structure our transactions in ways that minimize any risk of triggering lender concerns.

Will my lender find out about the transfer?

Lenders typically do not monitor property transfers unless payments are missed. We ensure that payments are made on time through a professional loan servicing company, which provides an extra layer of security for both the seller and the lender.

What happens to my name on the mortgage?

Your name remains on the mortgage, but we take over the responsibility for making payments. Many sellers find that this actually helps improve their credit as payments continue to be made on time. Additionally, we can provide documentation to show your lender that another party is responsible for the payments, helping with your debt-to-income ratio.

How does this help if I need to buy another house?

Since we use a loan servicing company, we can provide documentation that another party is making the payments. This allows many lenders to exclude the existing mortgage from your debt-to-income ratio, making it easier for you to qualify for another home loan.

Can I still qualify for another VA loan if I sell my house this way?

Yes! If you are using a VA loan, we can structure the transaction in a way that allows you to restore your full VA entitlement. This means you can use your VA benefits again for another home purchase.

What if I have little to no equity in my home?

Even if you have little or no equity, we can still work with you. Many homeowners in this situation find it difficult to sell through traditional methods, but our approach allows you to move forward without needing to bring money to closing or wait for a buyer who needs bank financing.

Can I sell my home this way if I’m behind on payments?

Yes! We can often work with sellers who are behind on payments by catching up on the past-due amount and taking over future payments. This can help prevent foreclosure and protect your credit.

How quickly can we close?

Because we don’t rely on banks or appraisals, we can close much faster than traditional buyers. Once we agree on terms, we work with a title company to complete the process as quickly as possible.

What kind of properties do you buy this way?

We consider all types of residential properties, including single-family homes, townhouses, condos, and even multi-unit properties. If you have a mortgage, we’re happy to explore options with you.

Will I need to pay any closing costs?

No, we cover all standard closing costs, so you don’t have to worry about any out-of-pocket expenses.

How do I know you will keep making payments?

We use a third-party loan servicing company to handle payments, ensuring that they are made on time and recorded properly. This gives sellers peace of mind, knowing that an independent company is overseeing the process.

Can I still live in the house after selling it this way?

No, this type of sale is designed for sellers who are moving on from the property. However, if you need extra time to transition, we can discuss temporary occupancy options.

Can I sell my home this way if it’s in bad condition?

Yes! We buy homes in any condition. Unlike traditional buyers, we don’t require repairs or renovations before closing.

Do I need to inform my mortgage company before selling?

No, there is no requirement to notify your mortgage company. Your mortgage stays in place, and we simply take over the payments.

What if I have tenants in the property?

We can still buy the property even if it is currently rented. If needed, we can work with the tenants to ensure a smooth transition.