Subject-To vs Loan Assumption

2 Replies

In a nut shell and with out getting too complicated there are two main differences between the two.

1. Loan Assumption - Plain and simple you assume the loan without having approval from the bank (banks do not like this because there is no way to verify if you are a candidate for their loans) However, if there are any liens or if they are behind in their mortgage you would mostly likely have to pay that off to bring the loan current and risk losing the home you are trying to acquire.

2. Subject-To - A subject to is the same as a loan assumption with one big difference. In a loan assumption you assume responsibly for the loan "AND THE NOTE". With a subject-to you only assume responsibility of the house while the homeowners are still responsible for the note. 

These things can get very complicated quick, fast, and in a hurry. Which is why I do not teach these types of deals to my Agents. If you are attempting a subject-to then I highly recommend you get with a KNOWLEDGBLE real estate attorney. 

Originally posted by @Wayne Brooks :

@April Munoz I think you mistyped in your “loan assumption” description. An assumption is only With lender approval and application. Only fha or va loans are assumable. 

 Thank you for clearing that up. The bases still holds true where on a loan assumption the buyer assumes the house and the note while on a subject-to the buyer only assumes the house and not the note.

Marko Rubel
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