Wholesaler · Palmdale, CA · Member since 2014 · 5 posts · 4 votes
Hello all,
I have a question regarding a subject to.
If one were to acquire the title of a house on a sub2 and the property had substantial equity, of course it would make sense to flip; however, i am looking to hold this property. the question is: How do u take care of the mortgage that is in the sellers name? what i mean by this is, if u are already making the the payments on the sellers mortgage and you are the title owner, but you want to remove them from the mortgage (so their credit won't be affected), do u take out a New mortgage on the property under your name and pay the first mortgage with it??
Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes
12y
If you refinance the property, escrow will send a request for demand to the current lender. That lender responds with the payoff amount which will be good through a certain date. Your new loan funds, the old loan gets paid off and reconveyed, a new deed of trust is recorded against the property in first position. Now you have signed up for a long term liability and since it is a refinance, not a purchase money loan, you could be held personally liable for any default. Which means, yes, they can sue you in court after the foreclosure and come after you forcing you into bankruptcy.
So, a question I have is, why would you EVER want to pay off a sub2 loan with a loan in your own name? If it is a balloon or adjustable I understand, but if it is a fully amortized loan with a low interest rate, there is very little risk. Don't let the imagined fear in your mind cause you to make an irrational decision.
Hello. I am just learning about 'subject to' deals and have a question I hope someone can answer. Can the seller of the 'subject to' refinance the loan to pull out equity after I have been paying the mortgage for a number of years?
Investor · Roseville, CA · Member since 2009 · 1k+ posts · 583 votes
6y
@Elijah Kajarno he can not. He does not own the property anymore. It was sold subject to the existing financing. Only the owner can refinance a home he owns.
I'm not sure if someone already mentioned this but make sure to get a Power of Attorney when you close on the Sub2 side. You can make it a limited POA to only the mortgage and that particular house. It just makes things easier when you go to refinance. You can now show you have the legal right to discuss this mortgage and property.
Can you elaborate what you mean "get a power of attorney"? Who do I talk to about this..? RE attorney (im in CT)
The seller is in his 70s so I would like to do that because I don’t know how long he’ll be around. Plus the only reason I want to avoid the bank is timing right now. I rather the property be in my name so there’s no issues with insurance taxes etc..
I have a sub2 deal and the lady has been dead like 4 years. When you buy sub2, you transfer title (that's the buying part) into your name (or entity), but the loan stays in his/her name. As long as you do all the paperwork correctly, you shouldn't have an issue with getting the loan called. Hasn't happened to me and I've done a bunch of them here in SoCal.
Would you mind hooking me up with the paperwork you use? You seem to have it down correctly, I am afraid I will get loan called.