Subject to / seller financing hybrid
How do I structure a deal if I want to do seller financing but the seller has a mortgage. I've seen 1 post talking about subject to and seller financing hybrid but it doesn't explain or break it down.
Ex. Seller still owes $130,000 and wants to sell the house for $500,000 using seller financing.
Thanks for the help.
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- Investor
- Virginia
@Jason Leggett
Subject to is you take over payments on the mortgage and make those payments and then you also pay the seller based on loan terms as well
More to it but that’s it in a nutshell. If you look up William tingle on YouTube he has a ton of info on this strategy
Thanks I will do that.
Quote from @Jason Leggett:
Thanks I will do that.
Best thing to do is first, hire a transaction coordinator (constant close or equivalent), along with a third-party note servicing company ( like Evergreen or equivalent).
First, secure the sellers equity payments by executing A) Promissory Note and B) Mortgage Deed of Trust for the seller's second position.
Second: You will need C) Executory agreement (add clause that if you default on the payment, seller can take back ownership D) In addition, a purchase an sales agreement reflecting the subject to the existing mortgage note, under the seller's name
Get title insurance with the seller as a secondary in addition to the insurance already on the property.
The purchase agreement reflecting both the equity payments and mortgage subject shall be executed and held deed to property, via this hybrid transaction be transferred into the buyer name..
The deed, instead of being recorded at the registry, triggering a potential risk of a due on sale clause, shall be held in a mutual accessed safety deposit box along with the executory contract. This contract shall give instructions to record the underlying deed (showing the buyer "you" as the owner on public record) once the equity payments and subject to mortgage balance is paid off in full on a undisclosed date, or, if both parties prematurely sign the executory contract prior to mortgage balance being paid off in full/ and/or the equity payments full paid.
You may be thinking of a wraparound mortgage where the buyer gives a new mortgage to the seller, which as the name implies, wraps around the existing mortgage.
From my understanding, you can subto the current mortgage and then the seller can create a seperate mortgage for you to put in the second position on the property…I could be mistaken but I believe that is what you mean