Stumble It!
Sell by Subject To: Selling Your Real Estate In A Credit Crunched Market
It's not a problem with your house. It's that no one has been able to get the financing to purchase your house.
You could sell your house by "subject to". Depending on your situation, and the amount of equity in your home, some buyer's may prefer to buy "subject to". The "subject to" means subject to the existing financing. It is on the HUD1 statement. The mortgage stays in the sellers name, but the deed goes into the buyer's name. Any equity you have in the house would be paid at the time of closing, according to the price agreed upon. "Subject to" is a good option for buyers who have some cash, but do not have credit, or want to use their credit.
Use an attorney to close who knows the basics of "subject to" transactions, and you may want a third party to watch guard that payments are being made. It is still the sellers credit, so make sure you can qualify for a new loan with this loan still on your record. Usually if you can show that payments are coming in for the loan it does not go against your debt to income ratio. Also, if the new owner would stop making payments, you will have to make them, just like in a lease purchase. Make sure when contracting with the buyer, you have details included about deeding the property back if payments are not made, instead of the property going in foreclosure. You would not owe them any money already paid, by down payment or monthly payments.
With a "subject to" transaction you bring in the "due on sale clause" written in the mortgage agreement. Both parties need to know that the bank has the right to call the loan due. As long as the payment is being made on time, the banks do not want to "borrow trouble". Sometimes they will even send a form letter saying they have the right to call the loan due. But, as long as the payments are made on time, they do not proceed. This is not a guarantee, but even investors who buy most of their properties this way, have never had a bank call a loan due. I have several properties bought by this method and the bank knows it is being purchased by "subject to", and I was told to "just keep making the payments on time.
To learn more about "subject to" see the following articles that have been posted on my blog previously.
Subject To, The Absolute Best Way To Purchase Real Estate Investments
Buying Real Estate By Subject To
Buying Real Estate By Subject To: Part ll
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