Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
At it's basic level:
Assumption: Asking the bank to turn the loan over to you and going through the normal underwriting process, credit, income, DTI ratio etc
SubTo: Taking over the loan without telling the bank, no underwriting, no credit check, no income verification
Both have risks, but it's not my intent to be detailed in this post. Simply put, there is a very big difference. Subject To is a wonderful tool, for the right circumstances.
So, if someone is teaching you to buy properties using Sub To, just be aware that they aren't explaining the risks to you and that is where the danger is. We spend a great deal of time dealing with our students explaining those risks and how to avoid them and a simple one is to be properly funded. You can't borrow your way to wealth. It's incremental steps.
Investor · Clearwater, FL · Member since 2025 · 223 posts · 76 votes
10h
I am no expert but in layman terms, assumption involves bank vetting the investor and changing the loan and deed to the investors or their company name. Subto involves deed transfer but loan stays on previous owners name. Looks like some processing companies are catching these and invoking due on sale clause. But YMMV
Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes
8h
Quote from @Jay Toluganti:
I am no expert but in layman terms, assumption involves bank vetting the investor and changing the loan and deed to the investors or their company name. Subto involves deed transfer but loan stays on previous owners name. Looks like some processing companies are catching these and invoking due on sale clause. But YMMV
That's basically it from the bank's point of view. From the seller's point, with "Subject To" there is no way to foreclose if the buyer stops making payments since the property is no longer theirs. The loan doesn't change hands.
You likely already know this. but those who read this and don't know, there are (2) two separate legal tracks involved, one is ownership of the property and the other is legal responsibility to see that the debt gets paid. They are NOT the same thing.