How does the sub-2 affect their new financing.

3 Replies

Hello all, 

I'm working with a motivated seller and I'm going to approach them with a sub-2 offer. 

How will this affect them getting another mortgage for a house when they move?

What should they say if the lender asks about the current loan? 

I'm trying to get the answers before they get asked. And if anyone could come up with some other questions and answers that could get asked, well, that would be great. Thanks

Also, if I can think of other questions, I'll ask here. Thanks again.

The loan will appear on their credit report until paid off.  They will need to qualify for the new loan and the old one.  So, yes, a subject to sale will significantly impact their ability to get a new loan.

Its possible the new lender will consider the sale as something of a rental.  They may need to wait a year or two and show proof the payments are getting made.

Realize this does violate the due on sale on the existing loan.  So, the new lender already has evidence the borrowers don't stick to the terms of previous loans.  The new lender may or may not care.

You need to be very careful about what you say to these sellers.  If you give them any reassurance that they will be able to get a new loan, and then they cannot, you may get sued.  Best to disclose, disclose, disclose on deals like this.  And one of those disclosures is "you may not be able to get a new loan anytime soon."