Posted by JPiper on December 14, 2000 at 14:49:23:
When you take title subject to the loan, you take the loan as it exists. So if it’s an adjustable rate loan, those are the terms.
As far as “forms” go, I make offers with a residential real estate contract…I don’t use options. An option of course is just that, it doesn’t obligate you to exercise. On the other hand, you can turn a real estate contract into an option-like contract simply by inserting a contingency…like subject to an inspection, or subject to verification of the terms of the loan.
I would think that most sellers are going to be more accustomed to a real estate contract than an option agreement.
What are your terms for taking subject-to Adjustable Rate Mortgages?
Also, tonight I am meeting with a seller–what is the best form to tie up a property? Will Bronchick’s ‘Option to Purchase Real Estate’ do the trick, and if so, what are the consequeces if I back out–I thought there were NONE, just wanted to confirm.
Thanks,
Vladimir_Chicago
Remember that you make your profit going in. The equity is more important than the rate. When you purchase subject to your ultimate out is normally for them to refi/purchase. In the meantime you L/O, contract for deed, or PACtrust.
It is hard to flip a subject to to another investor so you don’t need to tie it up for a long time. I use a standard state contract for with the appropriate clauses. But I also don’t put a contract on something that I don’t want or can’t do.
As far as deciding on the adjustale rate. I would think the main thing is what do you have planned for the property. The longer you hold it the more important the adjustable factor that kicks in is. Just like anything else the number have to work. You need to know the details as to when it will adjust, what the margin is, etc. to find out those numbers.
Unless you’re just going to hold it shorter term then it will matter little or none.