When we purchase a property while keeping the underlying mortgage intact, that is known as a "subject-to" transaction. We (the buyer) are essentially assuming responsibility for the existing mortgage. Despite its long history, we have found that some real estate agents, brokers, and investors may not be familiar with the strategy and can raise concerns about its legality. However, the method has been used for decades, the transactions can be insured by title companies, and the IRS also recognizes and acknowledges subject-to transactions. Additionally, lines 203 and 503 on the Department of Housing and Urban Development (HUD) statement signify that we are acquiring the property subject-to the existing mortgage terms and is a legally recognized transaction. In other words, even the government form used to record nearly every real estate transaction in the United States has a box to check if the purchase is made “subject-to”.

Some great resources here:

IRS Publication On Subject-To: https://www.irs.gov/publications/p537?fbclid=IwAR2j_PUFuA4trhl1NdZNeLVM_kBfz2onjmA149A_mSfIvRY9iiwm22TIUN8

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

There can be many benefits to allowing a buyer to take over the existing mortgage. One of the most common examples is when an owner needs to sell their property but also has low equity in the property. In these cases when an owner opts to sell on the retail market with a real estate agent, it is very common for them to come out of pocket (pay money) at closing once the mortgage balance, agent commissions, and closing costs are paid. Nobody wants to be in a situation where they have been keeping up with paying their mortgage (for 3 months or 3 years) and now it costs them money in order to sell their home. That stinks! Additionally, many people don’t have the cash to cover these costs which can put them in a situation where they are trying to sell a property for more than the market will pay, and their agent is having a difficult time finding buyers.

There are other examples where sellers could be facing pre-foreclosure, divorce, relocating for a job in a short timeframe, or own a distressed property that needs work just to be able to go up for sale on the retail market. When we take over the existing mortgage, not only do we buy the property in as-is condition, without appraisals, we can also offer flexible terms such as closing on the sellers timeline. We can even provide assistance with moving or finding their next place to live, and most importantly we are able to put money in the hands of the seller at closing so they can maximize their equity.

Even when a seller is already working with an agent, we can still provide benefits to the seller as it is common practice for the buyer in a subject-to transaction to pay the agents commissions and closing costs. This is also a massive benefit for an agent that no longer has to market a hard to sell property while still getting paid their commission.

While subject-to transactions may not work for everyone, we have seen them become an extremely beneficial solution for many of our sellers.

We do not send payments to you for your mortgage. We want this to be as simple and painless as possible. We will pay for a loan servicing company to service our agreement and make the payments on time.

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.

In the unlikely scenario that everyone in our company goes down in a plane crash or gets abducted by aliens, and we are unable to continue make payments, the property would be transferred back to the seller through the Deed of Trust. This means that the seller would keep all the funds we’ve paid up to that point and also regain possession of their house.

The seller is protected by a document called a Deed of Trust and also a Promissory Note (contract) enforced by the closing Title Company. A Deed of Trust is a legal document that allows a borrower to transfer the ownership of their property back to the original owner to avoid lengthy foreclosure and attorney fees. This document is completed at closing and drafted by the Title Company.

What happens if the Due-On-Sale Clause gets called? It's important to note that such situations are rare. We've engaged with lenders in these cases, explaining our position, and found that they withdrew their request because they prioritize the performance of their loans. Additionally, we can explore options such as refinancing or selling the property. Alternatively, we can facilitate a deed-back arrangement with the seller and enter into a lease-option agreement, where we would become tenants with the option to purchase the property in the future. These are just a few of the available solutions that effectively address the due-on-sale clause concern.

Are you worried about qualifying for your next home purchase due to a high debt-to-income ratio? You’re not alone! When a borrower is responsible for a mortgage debt but isn't the one making the payments, the lender may exclude this expense from the borrower's monthly obligations. This is possible if the party making the payments is also obligated on the mortgage, there have been no delinquencies in the past 12 months, and the borrower isn't using rental income from the property to qualify.

To exclude these debts from the borrower's DTI ratio, the lender needs the most recent 12 months of canceled checks or bank statements from the party making the payments, showing a 12-month history with no late payments. There are also scenarios where a borrower can qualify for a loan almost immediately without providing 12 months of proof of payments from another party.

This can be a complex topic with many nuances. If you have specific questions about your situation, please give us a call. We’d be happy to discuss the details and find a solution that works for you.

Some great resources here:

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DTI for FHA, VA, and Conventional loans:

To provide you (the seller) with a personalized offer, we need specific information about your situation. Some questions may seem personal, but they are crucial for us to thoroughly understand your circumstances and craft the perfect offer. By visiting the "Selling A Property" link in our navigation menu above, you can access a form to submit all the necessary details.

For example, we will need:

• Full Address

• Mortgage Balance

• Monthly Payment (PITI)

  • Principal

  • Interest

  • Taxes

  • Insurance

  • HOA Fees (if applicable)

• Status of Mortgage (any delinquencies or property liens)

• Major Repairs Needed

• Most Recent Mortgage Statement

We understand that this may seem like a lot of personal information, but it helps us to provide the best possible offer for your situation. Rest assured, your information is kept confidential within our business and is not shared with anyone outside our organization.

We’ll review the information you provided and may reach out by phone for additional details about your situation and the property you want to sell. After evaluating all the specifics of your home, we’ll typically be able to present a fair and honest offer that benefits everyone involved. Once you receive an offer from us, there’s absolutely no obligation to accept it. The decision to sell your home is entirely up to you. If you choose to sell to us, the process will move quickly, and you can even select a closing date that suits your schedule!

As investors, we often purchase homes "subject-to" because we can secure lower interest rates than current mortgage offerings while also providing sellers with more cash in hand to maximize their equity.

Absolutely! There are many buyers capable of keeping up with a monthly mortgage payment that are simply not able to get qualified for conventional lending due to divorce, job loss or turnover, credit history, or other circumstances. This process involves no banks, credit checks, or qualification requirements, and it moves quickly. Additionally, it typically incurs fewer out-of-pocket expenses compared to traditional methods. The benefits we enjoy as investors can also benefit you as a homebuyer, especially if you need a place for your family but can't qualify for a conventional mortgage.

Visit the "Buying A Property" tab in our navigation menu at the top of this page to complete a simple form. This will allow us to gather basic information about what you're looking for and determine if we, or someone in our network of investors, have a suitable property for you. We can also add you to our buyers list for future opportunities as they become available.