Potential subject to deal.

[William Makin]

Hey so I'm new to real estate investing and because I am self employed and my wife is a teacher and we recently got a loan on a car for her we won't qualify for traditional financing. That's what the lender we talked to told us. We live in Utah where house prices are fairly expensive.

My uncle is moving out of state and looking to sell his current house.

From what I understand about subject to financing we would sign a contract stating that i will take over his existing mortgage the mortgage would stay in his name and my name would go on the title.

my questions are the following:

1. Is that correct or did I miss anything

2. What happens to the existing equity that he has in the property and would I be able to access it with a HELOC or home equity loan.

3. Does any one know a lawyer in Utah that has experience with this type of financing that could help draft a contract.

4. I know this could trigger the due on sale clause and has anyone seen that happening more since interest rates are rising and the banks could potentially get a new loan at a higher interest rate.

[Chris Davidson]

@William Hochstedler Many great responses here, and looks like you have the opportunity to get a place. However Like @Nathan Gesner said get your finance straight. Is your uncles house going to be your primary that doesn't generate income? If so you are buying a house but what is the investment plan?

However if the Uncle doesn't need a lump sum right now, you can take the property over subject to with an owner carry for the remaining portion of equity and no new lenders are involved (albeit your uncle) and long term escrow can likely be handled by the same company doing title and escrow.

Just be smart if you are looking to get going in investing don't over commit your self to payments where you are starting form a high DTI right away and only a primary to show for it.

Best of luck and make it happen!