Updated almost 3 years ago on . Most recent reply
IS SUBJECT TO DEAL POSSIBLE WHEN SELLER NEEDS ANOTHER MORTGAGE??
I am a real estate agent on Long Island, working with a buyer who has $150,000 to put down and is looking to maintain a $4,000 monthly payment (between principal, interest, taxes, and flood insurance). I found a motivated seller who is looking to get $700,000 for their house. Of course, with the going interest rate, my buyer cannot afford this house. However, I checked public records and see that the seller closed on this house in June of 2020. I looked up interest rate during that time so I believe his interest rate should be around 3.7% (possibly lower). I ran numbers and they look like this...
Purchase Price $ 700,000.00
Down Payment $ 150,000.00
Subject to Mortgage (3.7%) $ 500,000.00
Seller Finance (10 year term at 8%) $ 50,000.00
Subject to Payment $2,301.41
Seller Finance Payment - $606.64
Taxes(12,200) + Flood($1,000) - $1,100.00
Total monthly payment for my buyer - $4,008.05 
The seller is motivated because he found a new house he would like to buy but the purchase will be contingent on the sale of his house. I HAVE NEVER DONE A SUB TO DEAL BEFORE. But this seems like it makes sense. I know the seller will need to take out a mortgage for the new house that he wants to buy. I remember Pace saying it is possible to do a sub to deal by somehow off-setting their mortgage debt with the payments that my buyer will making, allowing them to qualify for another mortgage. Can someone please let me know if this is possible and help me understand how to do it? I will be eternally grateful 
Most Popular Reply
@Nick Barberio You would have to explain the situation to the seller's lender. They may require the buyer to sign an affidavit of responsibility to the payments. The seller should also use a different lender to reduce the chance of their old lender calling the loan due.
Another option is to use a contract for deed. The income from them is typically credited 100% to the seller's income.