So this is probably a case of me trying to make a deal where there is no deal but in the interest of being able to have options for the seller...
If you buy a house subject to existing financing, does that debt no longer count towards their debt to income ratio if they're trying to buy something else? If not, what can be done for them? They only owe $30k on a $200k house. Thanks!
The debt will count toward them unless:
1. They have an assumable mortgage (not likely at all).
2. You assume their mortgage. You will need to meet all the lien holder's requirements.
Also, where is the residual $170k coming from? Can you provide more details?
If you buy subject to, it means the original mortgage is still in place, so yes it is still on their credit, it takes a novation or a new mortgage to remove that debt from their credit.
I think you may be trying to force this assumable mortgage idea. The time you use it is when the current mortgage of the seller is a bit lower than the purchase price. Normally, you'd make up for the difference between the purchase price and the current mortgage with a cash "down payment" to the buyer. With only a $30k mortgage and assuming you aren't going to put $170k down, I don't think this is the spot to use that strategy. You are going to need a regular mortgage anyway unless they are willing to hold the note for the remaining $170k (less your down payment).
Thanks Mark, you're absolutely right. When you first start out you see opportunity everywhere and assume there has to be a way to turn it into money. I'll just have to keep plugging away at my marketing. Thanks again.
Best of luck Donte.
This post has been removed.
Autocorrect is killing me. Sorry... Dante.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing