I've been reading about creative financing options like "rent to own", and "subject to" and could see that there are a lot benefits in using those strategies. My concern is the the "due on sale" clause being executed by lending institutions when using these methods. As a new investor in New Jersey, I'm just curious if anyone has any experience using these methods there and if they have ever had an instance where "due on sale" was executed? Are lending institutions strict around here or are they just content with getting their paymens? Any info would be really appreciated.
I'm not from your area or even state but I utilize some creative financing methods both for myself to purchase and selling. I have never had an issue with it and I even have the buyer obtain homeowners insurance with me as an additional party. I also make sure my lender is listed as First Morgagee. I've had them send me letters asking for proof of insurance but that is it. Never an issue. Many will say just don't switch insurance because its a red flag to them. However I've never had a problem not to say I never will. Just have a backup plan or better yet 2 or 3 plans. You'll never have a for sure your good on this one but I will say chances are low. Hope this helps.
I have done them for 30 years, and with proper structuring, and payment on time, I have yet to have a loan called due.
Thanks for the info guys! Bryan, so basically as long as the lender is aware of what I'm doing and they are paid, they shouldn't have a problem?
You must be a BiggerPockets member to post on the forums
Join the world's largest, most open Real Estate Investing Community online, 100% free forever!