Any tips for owner financing with outstanding mortgage

[Javier Lombera]

I come to a deal where the seller maybe willing to offer owner financing but there is a mortgage on the property and because the due on sale clause, I don’t know is the owner financing would be a good option on this particular case. Any ideas?

[Lee Hauenstein]

From what I understand (have not experienced this yet) you could do a “Subject to” deal and in this case it would be subject to you (buyer) now makeing payments on the mortgage.   There is at least one Podcast that talks about this.  Now, if the purchase price is above the current mortgage amount, then you and the seller workout what is acceptable terms for making for paying back the additional monies.  

As for the “due on sale clause”, what is the current interest rate on the mortgage. Is it really worth the banks time and money to call it due if the mortgage is at 4% and if you had to finance it, it would be 4.5%?  The juice worth the squeeze for the bank?  For the most part, if the bank is getting paid, they aren’t likely to call It due when/if they find out the property has been sold.  

I’m not saying the bank won’t call it due, but it’s gotta be worth the time and money to do so.