The technical term is “Subject-to”. Subject-to is purchasing a property subject to the existing financing. This means the loan stays in place without the buyer qualifying for the loan. The owner deeds the property over to the new buyer, with the new buyer making payments just as the previous owner did. The new buyer assumes no change to their debt ratio.

Also used is the wrap-around mortgage (wrap). A wrap is a form of secondary financing in which a seller extends to a purchaser a junior mortgage which wraps around and exists in addition to one or more superior mortgages. Under a wrap, a seller accepts a promissory note from the buyer for the amount due on the underlying mortgage plus an amount up to the remaining purchase money balance. The new purchaser makes monthly payments to the seller, who is then responsible for making the payments to the underlying mortgagee. Should the new purchaser default on those payments, the seller then has the right of foreclosure to recapture the subject property.

Yes, this is legal. Reference the government form for closing called a HUD-1. Line 203 on this form asks “existing loans taken subject to”. This shows that the government supports Subject-to transactions.

No, the financing is already in place on the home from the previous owner.

No, this is actually getting ownership of a home. If you prefer lease-options, we do have those available. However, these homes are not lease options… you actually own these homes!

It all depends on the home. Some homes may need to be brought current from foreclosure. If so, you’re looking at the late payments and the normal closing cost. Also generally speaking, the more money down the better the monthly payment. Traditional lenders are now favoring 5-10% down of the purchase price plus closing cost. This method usually averages 2-10% down. Our fee is also included in your down payment.

It’s much easier. The traditional way would involve finding a realtor and lender for getting pre-approved. Once you find a house you like you would then need to go through the lender’s hoops to get qualified. You’ll need good credit, plus the 10% down payment, closing costs, and a collection of financial information to prove your income. When taking over payments, all you need is a house and down payment.