What does subject to existing mortgage mean?

Asked By: Cecelia Liebscher | Last Updated: 7th June, 2020
Category: real estate real estate buying and selling
4.9/5 (142 Views . 15 Votes)
Buying “subject to” means buying a home subject to the existing mortgage. It means the seller is not paying off the existing mortgage and the buyer is taking over the payments. The unpaid balance of the existing mortgage is then calculated as part of the buyer's purchase price.

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Then, which is an advantage of a subject to mortgage?

Lower Barrier To Entry: Subject to financing strategies allow buyers to acquire properties without committing to the large down payments we have grown accustomed to. The initial payment doesn't need to be 20 percent, as one could expect if they wanted to acquire a loan without private mortgage insurance.

Also, what is a subject to transaction? A subject-to transaction is a creative finance technique where a buyer is able to take title to property without obtaining a loan in the traditional manner. The transaction usually involves the seller of the property leaving his or her existing financing in place.

Secondly, what does Subject to mean in real estate?

"Subject-To" is a way of purchasing real estate where the real estate investor takes title to the property but the existing loan stays in the name of the seller. You can approach the homeowners and explain to them that you are interested in purchasing the property "Subject-To" the existing financing.

What does Subject to mean in a deed?

Selling all or partial interest in real estate when there is a mortgage will be "subject to a mortgage or deed of trust." This means that the property has a recorded lien against it, placing a minor "cloud" on the title.

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What is another name for a subject to mortgage?

A mortgagor may sell the property either "subject to a mortgage" in which the property is still security and the seller is still liable for payment, or the buyer "assumes the mortgage" and becomes personally responsible for payment of the loan.

What is the difference between purchasing real property subject to a mortgage and assuming a mortgage?

"Subject to" means the seller is not released from responsibility. The word "assumption" is used when a buyer assumes personal liability for an existing debt. If the buyer defaults, the seller no longer has responsibility as the buyer has "assumed" the loan. The new buyer purchases the property subject to the mortgage.

Can you get a mortgage with an existing loan?

As part of the application process, mortgage lenders will check your credit history and recent financial outgoings to determine whether you'll be able to afford your monthly repayments. If you're still paying off a personal loan, you may still be eligible for a mortgage.

What is unique about a subject to purchase agreement?

What Buying Subject to Means. Buying subject to means buying a home subject to the existing mortgage. It means the seller is not paying off the existing mortgage, and the buyer is instead taking over the payments. The unpaid balance of the existing mortgage is then calculated as part of the buyer's purchase price.

How do you make an offer subject to finance?


In this contract, you have the option to include a clause that says your offer is 'subject to finance'. This means that your offer is conditional upon the lender approving the amount of finance you will need to purchase that particular property.

How does a subject to mortgage work?

Buying “subject to” means buying a home subject to the existing mortgage. It means the seller is not paying off the existing mortgage and the buyer is taking over the payments. The unpaid balance of the existing mortgage is then calculated as part of the buyer's purchase price.

What is a subject to sale offer?

Regardless this post will help you navigate a subject to sale offer. Basically a subject to sale offer is a buyer will make an offer on your property but the offer will be subject to that buyer being able to sell his home in order to purchase your home.

What does Subject to financing mean?

Subject to financing basically means that a Buyer, for up to 7 days after an offer is accepted, can walk away from or kill the accepted offer if the Buyer cannot get satisfactory financing. Keep in mind this is a subjective criteria based on the Buyers opinion of the financing as to whether it is satisfactory or not.

What is a subject to clause?

What the 'Subject to' clause really means. This is a suspensive condition meaning that if the sale of a property is subject to the sale of another one, it simply means that if that event does not take place the transaction lapses and therefore no cancellation of such a transaction is necessary.

How does a wrap around mortgage work?


A wraparound mortgage, more commonly known as a "wrap", is a form of secondary financing for the purchase of real property. Under a wrap, a seller accepts a secured promissory note from the buyer for the amount due on the underlying mortgage plus an amount up to the remaining purchase money balance.

What is a sub2 deal?

A “Subject To” deal, or “Sub2,” is a method for buying real estate… without actually purchasing it. He owes about as much as the property is worth (no equity) – so he can't easily sell because the agent fees and other costs would cost too much money out of pocket.

What is a sub 2 in real estate?

Subject to Financing Defined
In a subject to, sometimes called a subject 2 deal, the existing financing that a homeowner has setup is taken over by an investor. This route is basically paying for the mortgage already in place through an agreement with a homeowner.

Can you refinance a subject to?

YES you can refi a subject 2 and it is called a equitable interest refi.

Do I need to sell before I buy?

Selling first is beneficial if you need to access your current home equity to buy your new home. However, selling first often requires temporary housing while buying your new house. From a real estate market standpoint, selling before buying makes the most sense for people who are selling in a buyers market.

What are subject 2 deals?


A “Subject 2” real estate deal is when the existing mortgage that the property owner has in place is taken over by a real estate investor. The investor takes over the mortgage payments on the original loan and the deed is then transferred into the investor's name. In this “Cash Flow King Podcast” episode, Dr.

What does Subject to mean?

subject to. Being dependent or conditional upon something, as in subject to shareholder approval. Being under the dominion or authority, as of a sovereign, authority, or government, as in subject to the boss's whims. Open or exposed to some unfortunate or undesirable thing, as in subject to criticism.

Is subject to legal?

Yes, it is legal.
It shows up on the HUD1 on lines 203 and 503. This is an excellent way to acquire properties anytime the seller agrees to sell by transferring title to the property while leaving the financing in their name.