Posted by Aaron on March 07, 2002 at 15:55:15:
Here’s what I’ve learned so far…hopefully, someone will correct me if I’m wrong:
The seller is signing over the deed to you, as well as giving you the power of attorney to make the loan, tax, and insurance payments in his name. Usually the seller has little in the way of equity in the house, so that’s not an issue. Otherwise, you may end up paying the seller some money. I had a friend recently buy a house subject-to and gave the seller $2K for moving expenses. The guy was pretty hard up.
The lender CAN call the note due, but they don’t do it that often, or ever (so I’ve been told). There’s a way to obfuscate the transaction using land trusts, but I’m not that familiar enough with them yet.
Some agreements allow the seller to buy-back the house for $1 if the buyer defaults on the payments.