Subject to Loans

[Matt Sora]

can someone explain to me what a subject to loan is and why anyone would ever want someone to do this for them? Confused on topic. I believe this means you just takeover their loan.

[Griffin Pratt]

@Matt Sora, a 'subject to' purchase agreement is when you exchange the deed/ownership of a property "subject to" the previous owners existing mortgage. If you're familiar with buying a property by 'assuming the mortgage' this process is similar except that the note (or mortgage) stays in the original owners name. This means that while the deed to the property is in your name and you are making the payments on the loan, the lien against the home remains in the original owners name. As an investor, its a good tool to get a foot in the door with less capital and risk, since you don't have to originate a loan and the loan is in someone else's name. (However, the bank holding the mortgage can potentially call the remaining balance due, so I'd look into the specifics if you're thinking about buying subject to.)  @Wendy Patton covered the reasons an owner may accept a 'subject to' contract well, but typically it is someone that has come on hard times, and can't or doesn't want to pay the mortgage.