Idiot question of the day... - Posted by JimmyDean

Posted by Andrew Thompson on September 19, 2004 at 22:50:48:

No! This is not the same as an assumable mortgage. An assumable mortgage is you call up the lendor and say “Hi, I’m taking over seller’s mortgage, I’m faxing you a copy of the purchase agreement, title, and other assorted forms, put the mortgage in my name. Yeah, Thanks.”

How you deal with the seller’s equity is between you and the seller. The best scenario would be with a very motivated seller, where you just agree to take over the payments, and you just inherit their equity.

Idiot question of the day… - Posted by JimmyDean

Posted by JimmyDean on September 19, 2004 at 16:38:51:

Okay I put in a less than extensive search of the archives, and even poked around on Google to find the answer to this, but to no avail, so I will post it for you all.

Very simply put, what is “Sub 2” financing?

Thanks,
The Village Idiot.

Another idiot question … - Posted by Skip Skuru

Posted by Skip Skuru on September 21, 2004 at 22:17:15:

What’s a house? I looked in the archives, but I can’t find it.

Re: Idiot question of the day… - Posted by Larry TX

Posted by @yahoo.com"]Larry TX on September 21, 2004 at 12:09:14:

If you could not find subject 2 in the archives, you truly are the village idiot.

Re: Idiot question of the day… - Posted by Skip Skuul

Posted by Skip Skuul on September 20, 2004 at 10:46:41:

Don’t worry, Jimmy, your post is not idiotic. Sub 2 is the secret floor just below Sub 1. When you purchase a property Sub 2 you and your family live on Sub 2 with your Tenant/Buyer on Sub 1.

Exactly what is a “Subject To?” - Posted by Randy (SD)

Posted by Randy (SD) on September 20, 2004 at 09:41:52:

What is a "Subject To? Subject to existing financing. In most real estate transactions the deed to the property is encumbered by a mortgage. You have a deed to the property giving you the rights of ownership and you have a mortgage on that deed where you have agreed to repay the lender for the money borrowed to purchase the property. In the case of a subject to the deed and the mortgage are severed. The owner transfers the deed to a new owner while retaining the mortgage in their name, with an agreement by the new owner to make the payments on behalf of the previous owner.

The due on sale clause may come into effect, depending on how the transfer is done. One popular method involves the use of a trust where in the existing owner transfers the deed to the property into a trust subsequently transferring the beneficial interest of the trust to the new buyer. There are specific provisions in the Garn-St. Germain Act (the act governing the creation on the due on sale clause) that permit this type of transfer for financial planning reasons. The transfer of the beneficial interest of the trust is not a recordable event. One additional consideration regarding the due on sale clause, as long as the payments are kept current by the new owner (payor) the lender has no motivation to enforce the due on sale provisions. They don’t want to have to foreclose, they don’t want the house back-they merely want their mortgage payments on time.

Re: Idiot question of the day… - Posted by Chyna

Posted by Chyna on September 19, 2004 at 19:52:15:

How do you get around the due on sale clause on a sub 2?

Re: Idiot question of the day… - Posted by Brad Crouch

Posted by Brad Crouch on September 19, 2004 at 18:33:41:

Jimmy Dean,

This is NOT an “idiot” question.

The simple answer is: Taking over someone elses mortgage payments. This means you are also using someone elses existing mortgage, and the property has already been deeded over to you.

Hope this helps,

Brad

Re: Idiot question of the day… - Posted by Barry (FL)

Posted by Barry (FL) on September 19, 2004 at 16:44:02:

Subject to the existing financing.

I buy a property from an owner that has an existing mortgage on a property and I buy it without getting new financing in my name, I simply continue to make the payments on the sellers existing loan.

Of course, this is a very basic explaination.

Hope This Helps,
Barry (FL)

HA HA HA HA! (nt) - Posted by E.Eka

Posted by E.Eka on September 22, 2004 at 17:48:35:

Love it!

You don’t… - Posted by JT-IN

Posted by JT-IN on September 20, 2004 at 24:00:12:

You simply hope that the Lender doiesn’t notice the that a transfer of the property has occured. Many folks camoflague this transfer by the use of a Land Trust, which may reference the Sellers name, and possibly the address of the property. As long as the lender has no reason to be concerned beyond simple curiousity, they usually won’t take issue with the property having been transferred to a Trust.

Acceleration is always a rememdy available to the Lender, and therefore, one who is purchasing RE via Subject To should have the wear-with-all to refi and payoff the Sellers loan, if such a loan was called due to the DOS clause. The reality is… most folks pay no attention to this, and walk the tight wire, hoping that the Lender doesn’t catch the DOS matter…

Just the way that I view things…

JT-IN

Re: Idiot question of the day… - Posted by Ian

Posted by Ian on September 19, 2004 at 20:59:08:

Hi,
“There is no such thing as a dumb (or idiot) question” :sunglasses:
Is this the same as an assumable mortgage?
If it is, and you take over the seller’s financing, would you then need to get a second mortgage to pay off some of the seller’s equity (if there is any), or get the seller to do a take back mortgage?