Subject To Financing - What happens to the loan portion already paid off by seller?

[Brandon Lee]

Hello, I've been watching a lot of Pace Morby videos and researching online, but can't seem to find the answer to this simple question. In a sub-to deal, you are assuming the remaining payments of an existing mortgage. But do you also have to pay off the portion of the loan that's already been paid off by the seller?

Example: Seller's original mortgage was $500k. Seller paid off $200k of principal, leaving $300k remaining on the loan. Buyer assumes payments on the $300k balance, but what happens to the $200k that the seller paid off? How would he benefit from just transferring remaining payments to the buyer, while never getting his $200k back??

Sorry if I'm missing something dumb and obvious, but can't wrap my head around this part. Thank you for any help!

[Account Closed]

Quote from @Brandon Lee:

Hello, I've been watching a lot of Pace Morby videos and researching online, but can't seem to find the answer to this simple question. In a sub-to deal, you are assuming the remaining payments of an existing mortgage. But do you also have to pay off the portion of the loan that's already been paid off by the seller?

Example: Seller's original mortgage was $500k. Seller paid off $200k of principal, leaving $300k remaining on the loan. Buyer assumes payments on the $300k balance, but what happens to the $200k that the seller paid off? How would he benefit from just transferring remaining payments to the buyer, while never getting his $200k back??

Sorry if I'm missing something dumb and obvious, but can't wrap my head around this part. Thank you for any help!

Actually you have a good reason to ask that question. That one of many, many things people gloss over in the "Pace Craze". Things are not as they seem. 
You owe the seller $200,000. It's called "cash out". It can be handled in various ways, but nobody walks from that kind of equity.

Here's a post I did on Subject To that may help

Using Subject To, to Get "Free" Properties

https://www.biggerpockets.com/forums/311/topics/1060320-using-subject-to-to-get-free-properties-a-quick-guideline