Popular Asked Questions
What is Subject To?
A Subject To transaction is when you buy a property and keep the existing mortgage in place. this means you take over the responsibility of paying the current mortgage. On official documents like the HUD Statement ( lines 203 and 503 ), it shows that you’re buying the property with the existing mortgage terms. Even though this method has been around for a while, some experienced investors and brokers might not know about it and could question its legality. However, the IRS recognizes this strategy and provides information about it in their Publication 537.
What happens if you stop paying?
In the very unlikely event that we can’t make payments, the property will go back to the seller through the Deed of Trust. This means the seller keeps all the money we’ve paid and gets the house back.
What about my DTI when i am ready for a new loan?
When you’re responsible for a mortgage but someone else is making the payments, the lender might exclude the full monthly housing expense (PITIA) from the debt-to-income (DTI) ratio. this can happen if:
The other party is consistently making the payments on time.
There haven’t been any late payments in the last 12 months.
You’re not using rental income from the property to qualify for the loan.
To have these payments excluded from your DTI ratio, the lender will need the last 12 months of canceled checks or bank statements from the person making the payments, showing a clear 12-month payment history.
How am i Protected?
The seller is protected by a document called a Deed of Trust and a Promissory Note, which are managed by the closing title company. A Deed of Trust is a legal paper that lets the borrower give back the property to the original owner to avoid a long foreclosure and lawyer fees. this document is prepared and signed at the closing by the title company.
How do i submit information to take the next steps?
To move forward, we need some details to create a personalized offer for you. Don’t worry, while some questions might be personal, they help us provide the best service. Here’s what we need:
*Full Address
*Remaining Loan Amount
*Interest Rate
*Monthly Payment
*Any Major Repairs Needed
Do you make payments to me, them i pay the mortgage?
No, To make things easy, we hire a loan servicing company to handle everything. A loan servicing company is a third-party businesses that takes care of tasks like collecting payments, sending statements, and making sure the borrower pays on time. This way, the seller can relax knowing their investment is being professionally managed.
What Happens after i send the property information?
After you send us your property information, we’ll review it and might call you to discuss more details about your situation and the property. Based on our review, we can usually make a fair and honest offer on your home that benefits both parties. Remember, there’s no obligation to accept our offer. The choice to sell is entirely up to you. If you decide to sell, the process will be quick, and you can choose a closing date that suits your schedule.