Subject To Existing Mortgage
How It Works:
- The buyer and the seller sign a purchase and sale agreement with all the terms and conditions of the sale, in the same way, you would with any other real estate transaction.
- The buyer and seller will sign all the necessary disclosure documents, explaining the
entire transaction so everyone is aware of the benefits and risks associated with this type of transaction.
- At closing, the buyer will cover all closing costs, any necessary back payments needed
to bring the loan current, and any other fees associated with closing on the property.
- Once the title has transferred and the closing is complete, the seller will move out of
the property and the new buyer will be responsible for paying all future mortgage payments.
Benefits of Selling Subject To:
- It allows you to sell quickly, since no banks are involved.
- You don’t have to manage a rental. A lot of times, if a seller can’t sell because there is
little to no equity in the property, they default into turning the house into a rental.
- Typically, the reason you would allow someone to take title Subject To the mortgage is that you were getting the price you want for the property, instead of selling it at a big discount and possibly having to come out of pocket.
- Real estate investors are easy to deal with, as opposed to owner-occupants. No commissions or closing costs are typically associated with this type of sale.