Subject To

[Darius Howell]

Does anybody know a little bit about "subject- to" I would really like to learn a little bit more on this topic. Please give as much information as possible, Thanks

[Albert Bui]

just keep in mind when refinancing a sub2 loan where the underlying obligator on the note is not you that its considered a purchase if its refinanced or exited under 12 months of ownership and after 12 months its considered a refinance.

To most it doesnt sound like any difference but there are stark differences in how underwriting looks at purchases versus refinances. One big example is that on purchases conventional underwriting will use potential market rents to qualify (meaning you dont need any tenant and you can still use rental income to help you qualify)  while on a refinance the investment property has to be tenanted to use rental income otherwise the UW will hit the borrower for the full monthly mortgage/tax/insurance/etc. with out any rental income to help offset. This might cause a DTI/income issue so plan accordingly when exiting a sub2 through financing.