Buy your next home: take care of payments with the transfer of deed

If you’re trying to buy a home and take care of the “Subject To” payments, here are the important things to understand.

First of all, for anyone who doesn’t recognize what a “subject to” acquisition is, it is when you simply take over the payments on an established mortgage with an informal deed transfer. That’s all! The house now becomes yours. This really is the best kept secret of educated real estate investors. While making your first “Subject To” purchase can be intimidating, it’s also a lot of fun! When the real estate instructor stood in front of the class and said, “getting a house is so easy,” everyone in the class, including me, thought he was a little crazy.

Well, he was right! Second to paying cash for a house, this is actually the easiest method of buying a house. You simply need to live the fear of the first! Once you’ve done a few of these, it just becomes second nature.

Things to know to take charge of payments:

First: You will most likely be contacted by the salesperson from one of your lead generation efforts. He’ll pre-qualify them over the phone to the best of his ability, so hopefully you won’t waste your time and energy traveling home. You should have a good idea of ​​whether the house works for you, and therefore the seller should have an idea of ​​what they will propose before you even get on the phone with them. Also, you should have a “close” estimate of what they “say” is owed on the property. It’s best not to mention that you want to take care of payments over the phone. Wait until you are at the owners house for that conversation.

Second: Before heading to the property, you will need to prepare. You’ll need a comparable sales stack (comps) so you can compare the home to others in the neighborhood in order to formulate the home’s true market value.

You may be able to get compensation by contacting a nearby title company or perhaps a closing attorney. When I started, I received compensation from the “Stuart Title” Customer Relations Department. Once you know the value of the residence, head to the house to meet with the owner and examine the house. In the event that the property needs a lot of work, then it might be in your best interest to pay for a residence inspection.

After you get to the house and feel comfortable with the seller, that’s when you would discuss with them about wanting to take care of the payments and buy Subject To.” If we come to an agreement, then you would sign a Sales Agreement on the spot, along with with all supporting documents.However many of you probably don’t feel secure enough to accomplish this.So I would suggest you talk to the owners and get comfortable together.

A very important factor you will need to do is discover the “EXACT” payment amount of the loan. And, you need to determine if there is a prepayment penalty attached to the loan. The only way this can be accomplished is to have sellers sign an Authorization to Release Information Form (ATRIF). Then call the lender on behalf of the seller, fax (ATRIF) and get the EXACT payment amount.

When you sign the Purchase and Sale Agreement, simply write “Approximately $XX, XXX” in the space designated for “Loan Balances Taken “Subject To”. Owner must have present a previous payment coupon which will give you an estimated payment balance. Also indicate the amount to take over the payments.

Third: When you have the house tied up, open Escrow and confirm all the details you have been provided. Loan balances, bonds, clean title, any inspection you choose to do, etc. Do your due diligence and make sure everything is in order.

Four: I have sellers sign all supporting “Subject To” paperwork when they complete and sign the Purchase and Sale Agreement. If you are having the owner place your home in TRUST (this is a real estate investor secret), it is the Trustee (not you) who will sign all closing papers at the Title Company or closing attorney’s office . My recommendation is that you name the Trust with the last name of the owner. For example, “The James Family House Trust”. The benefits of using the homeowner’s last name is simply because it keeps the title in the homeowner’s name, giving the impression that he never sold it. This could be essential to the Expiration of Sale Clause concern.

Fifth: I strongly recommend that you spend the fee and close with a title company or closing attorney to make sure you get a title insurance policy on the property. You’ll also have to deal with the issue of your homeowner’s insurance policy. It’s a bit confusing, but it can be easily accomplished.
The most important thing is to make sure the mortgage company doesn’t find out about the transfer of the deed, which could put the sunset clause into play; Making use of Trusts helps in this matter!

If done correctly, take payments, the “Subject to” purchase can be closed in a few days. This can be a quick and easy way to buy a home. Once you secure the settlement amount and the title company gives you clear title, you can close.