Seller’s Interest Rate

[Bill Regan]

Hi, in looking at getting into an investment property nowadays, it seems we could be creative about using the rate that the seller got a few years ago.

For instance, if they bought at 250k with a 3% rate, can we get that loan assigned and pay cash for the difference in what a property is selling for today?

Just trying to think creatively to make some number work better. All thoughts appreciated.

[David M.]

@Bill Regan

If I recall correctly, the "govt" loans can be assumed where the name on the mortgage and note changes to yours..  So, your premise is basically correct.  If you can assume the loan (which basically requires you to be underwritten successfully for it), then pay the seller the difference in cash.

Subject-to deals carry much more risk, generally to the seller.  We have had plenty of threads on this daily.  In short, imagine if I took Title to your house (you being the seller), but we left the mortgage in place.  I "promise" to make the payments for your (regardless of if I use a servicer).  Meanwhile, your credit is locked up in that mortgage since your name is on it until the Note is paid off or "I" choose to refinance /sell.

Happy to chat if it helps.  Good luck.