Subject 2 Call Due Scenario

2 Replies

In the *rare* event a mortgage is called due on sale by the lender, typically the options are to 1. refinance, or 2 cut a check for the remaining balance of the loan, correct? #2 isn't really an option

In the eventuality of #1, what are the costs incurred (how much money needs to be in reserve) to ensure refinancing can be covered -- is it just the normal costs of refinancing?

What happens to the equity in the home if called due? Is it just preserved since the refinance is just on the remainder of the loan?

So worst-case scenario for doing a sub2 on my parents' place is the bank calls the mortgage due and I refinance, pay the $5k (estimated) in closing costs for the refinance (I'd lower the term, and the loan amount will be less than 80% of the market value) and the mortgage is now in my name, but I still have the equity.

Am I seeing this clearly?