Recently I have been looking into subject to properties. I haven't found anything about what happens if you were to sell the home prior to the loan being paid off.
Say I were to get into a subject to agreement with a seller and instead of seller financing/renting it out I chose just to sell it (hopefully there is some equity within the home) since the mortgage wouldn't be under my name once the potential buyer goes to pay the bank is something going to look fishy if I try and collect the positive difference?
Also are you able to refi a subject to home? Or would that have to be something the mortgage holder would have to do?
You just order a payoff from the existing mortgage company to pay off the underlying loan.
You'll need to get a letter of authorization from the owner of the property with permission to contact their mortgage company.
A payoff can be requested without taking to anyone. Lenders have an automatic phone system for ordering a payoff.
Or, you can give the letter of authorization to the title company so they can order the payoff.
Ideally, you would have had the seller sign a disclosure authorization, prior to completing the Sub 2 transaction. That would allow you to get the information you need for a payoff. There isn't anything that will look strange to the title company about you receiving the excess from the payoff, because the property is titled to you. Remember, you take title to the property in the Sub 2 sale. It is only the mortgage that remains in the original owner's name. So, from the title companies perspective, the transaction is simply paying off a lien that is encumbering your property. All they care about is that the property becomes unencumbered, so the title is clear and can be freely transferred to the new buyer.
Oh, there can always be issues. Having authorizations in place to talk to the mortgage company along with a limited POA (power of attorney) regarding the property should let you get through those. Staying in contact with the seller and staying on good terms will give you a route to resolve any issues.
Jon Holdman, Flying Phoenix LLC
The person on the mortgage need not be involved in paying off the loan.
When you buy the house, you should get a Letter of Authorization to contact the lender. It will have the seller's loan information, their birthday and their social security number.
When you order a pay off you will need the information in the letter of authorization. You will also tell them the pay off date. You can use the lenders automatic phone system to order a payoff be faxed or mailed to you. Get it faxed. it is faster. You will usually get it within 24 hours.
The payoff letter is given to the title company, they take care of paying off the loan and dispursing any difference in the sales price to you directly.
The seller's Power of Attorney is not needed at closing. YOU own the house or your Trustee for your Land Trust can sign. The seller is not involved at all.
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