Frequently asked questions

What is a Subject-To Real Estate Transaction?

A "subject-to" transaction involves purchasing a property while keeping the existing mortgage in place, assuming responsibility for it. This term appears on HUD statement lines 203 and 503, indicating the acquisition is subject to the current mortgage terms. Despite its long history, some experienced investors and brokers may be unfamiliar with this strategy and question its legality. However, the IRS recognizes and acknowledges the subject-to strategy.

For more details, see IRS Publication 537, available See HUD EXAMPLES

How to Submit Information for Next Steps

To create a tailored offer for your seller, we need some specific details. While some questions may seem personal, they are crucial for crafting the perfect offer. Please provide the following information:

- Full Address

- Loan Amount Remaining

- Interest Rate

- Monthly Payment

- Major Repairs Needed

What Happens If You Stop Paying?

In the unlikely event that we are unable to make payments, the property will be transferred back to the seller through the Deed of Trust. The seller will keep all the funds we've paid so far and regain possession of the house.

What About My DTI When I Am Ready for a New Loan?

If you are obligated on a mortgage but not the one making payments, the lender may exclude the full monthly housing expense (PITIA) from your recurring monthly obligations if:

- The party making the payments is also obligated on the mortgage debt.

- There are no delinquencies in the past 12 months.

- You are not using rental income from the property to qualify.

To exclude these debts from your DTI ratio, the lender must obtain the last 12 months' cancelled checks or bank statements from the party making the payments, showing a 12-month payment history with no delinquencies.

For full details, review the [Fannie Mae DTI Assessment](https://www.fanniemae.com).

How Am I Protected?

You are protected by a Deed of Trust and Promissory Note, enforced by the closing Title Company. The Deed of Trust is a legal document that allows the property to be transferred back to you, the original owner, if payments are not made, avoiding lengthy foreclosure and legal fees. This document is completed at closing and drafted by the Title Company.

Do You Make Payments to Me, Then I Pay the Mortgage?

No, to make this process as smooth as possible, we hire a loan servicing company to handle our agreement.

A loan servicing company is a third-party entity that manages tasks like collecting payments, sending statements, and ensuring payments are up to date. This gives the seller peace of mind, knowing their investment is professionally managed.

What Happens After I Send Property Information?

After receiving your property information, we will review it and may contact you for additional details. Considering all aspects of your home, we’ll provide a fair and honest offer. There is no obligation to accept our offer; the decision to sell is entirely yours. If you choose to sell to us, the process will be quick, and you can select a closing date that suits your schedule.