Anyone have experience with loan assumptions?

[William Delaney]

Hi,

I’m looking at various ways to begin investing and have been looking at loan assumptions, or subject to deals. Does anyone have experience with these? Are they legally safe? And does the lender legally need to know? Any info would be greatly appreciated. 

[Matthew Von Dwingelo]

Hey William! 

I actually closed on my first subject to deal about 5 months ago. It is an amazing avenue to keep your financial investment on the low end. But you definitely need to familiarize yourself with the Due on Sale clause. Due on Sale gives the bank/lender the right to call the loan balance due upon the sale of the property. So if you purchase subject to, you are likely running the risk of having the bank call the loan due and if you don't pay off the loan they can foreclose on the house. 

I am not an attorney, however it is typically unlikely for the bank to call the loan due as long as you continue making payments. 

Here is a link to an awesome YT video that will break down Sub to investing! 

https://www.youtube.com/watch?v=qVv7a8npk6E

Best of luck my friend, let me know if there is anything I can do to help!