Effect to seller credit of Subject To

[Jacob Seethaler]

I'm curious what anyone's experience has been with sellers who attempt to purchase a new home after selling their home "Subject To". Are they able to qualify for another home purchase because the new buyer is servicing the loan or because they are the individual named on the loan does it become much more difficult for them?

[Jon Holdman]

The person who sold subject to will likely have to be able to qualify for the new loan and the old one at the same time. Certainly, if they're trying to buy a new house shortly after selling an existing on subject to, the new lender is just going to treat the old loan as if its still in effect and the borrower is still responsible for it. Which they are. Some lenders may consider the payments from the new buyer on the old property, after some time. If you're a sub2 buyer, disclosure of this to the seller is essential. If you're the seller don't count on getting a new loan quickly, unless your income and DTI qualifies you with both loans. As a seller, you're giving up a LOT of control over the property. IMHO, you really, really want to thing twice before doing this.