Subject to Existing Loan

[WGL]

What is the name of your state? Alabama

Hello everybody!

Can somebody please help me with a few lines of a sub2 contract. I want to take possession of property subject to existing mortgage. So, I'll be making up back payments , maybe rehab, and then taking over loan payments for people in financial trouble. The total contract is about 12 paragraphs. Here are the few lines that I'm having problems with:

I'll first set up a scenario:

Someone owes $80,000 on a mortgage. They'll sell to me for $70,000. The value of property is $100,000.

Here' paragraph 2 and 6 from contract:

2. Purchase Price The total purchase price to be paid by Buyer will be $___________

Earnest money deposit $___________
Subject to existing Loans $____________
Cash balance due at closing $_____________


Ok here's the part that really confuses me:

6. EXISTING LOAN In the event part of the purchase prices is to be satisfied by buyer taking subject to existing financing, buyer shall not be required to pay fees exceeding $_____________

Thank You,
Patrick

[FlyingRon]

Normally properties are sold unencumbered by debts held by the seller (the money they get for selling their property goes to pay off the previous mortgage).

With a subject to sale, you're paying less up front but not getting the mortgage released, which means it's up to you to continue paying it just like it was yours. Of course, this requires the approval of the lender.

The phrase you are looking at covers fees separate from your purchase price (the money going to the seller) that may be charged (usually an assumption fee) by the lender to transfer the mortgage to your name and stuff like that.

[HomeGuru]

Originally Posted by WGL

What is the name of your state? Alabama

Hello everybody!

Can somebody please help me with a few lines of a sub2 contract. I want to take possession of property subject to existing mortgage. So, I'll be making up back payments , maybe rehab, and then taking over loan payments for people in financial trouble. The total contract is about 12 paragraphs. Here are the few lines that I'm having problems with:

I'll first set up a scenario:

Someone owes $80,000 on a mortgage. They'll sell to me for $70,000. The value of property is $100,000.

Here' paragraph 2 and 6 from contract:

2. Purchase Price The total purchase price to be paid by Buyer will be $___________

Earnest money deposit $___________
Subject to existing Loans $____________
Cash balance due at closing $_____________


Ok here's the part that really confuses me:

6. EXISTING LOAN In the event part of the purchase prices is to be satisfied by buyer taking subject to existing financing, buyer shall not be required to pay fees exceeding $_____________

Thank You,
Patrick

**A: first, is there a due on sale clause in the mortgage note? Next is there going to be a title transfer?
Sounds like both parties are clueless. Very dangerous.

[LindaP777]

What does your attorney say it means?
Surely you are not buying property with a preexisting mortgage on it without a proper title search/report and attorney handling the closing? Real estate transaction should be handled by professionals who know what they are doing.