is it possible to take over a "subject to" loan?

2 Replies

Someone is selling their house at about 20k to 30k less than other comparable homes in the neighborhood but they have a usda loan and are seeking payoff. He is trying to sell so he can buy his wifes childhood home. Is there a way to take over the loan with "sub to" terms. If so how and is it legal? This is my first property so any info is greatly appreciated.

There are all sorts of the threads here on BP about Subject To. Just search for them.

USDA loans have an assumption clause most of the time. You can speak to the homeowner and see if you can both read the mortgage or deed of trust for the clause and then contact the bank accordingly. Usually it involves a 1% fee and you will have to be underwritten. If this property is for investment purposes, you might be hard pressed to get approved. That said, you might be able to work with the assumption clause in your deal with an end buyer. If that is your end game.

From the get-go, you should assume the odds of buying or selling a house via mortgage assumption are low.

Additionally, if the Seller has any equity in the property, you will need to be prepared to pay the difference between the mortgage any market value if any.

Because mortgage rates are so low, it may be a better idea to just purchase the home under a new mortgage and have them pay off their USDA loan.

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