What Is "Subject To"
What is a subject to?
“Subject To” in the context of home transactions and finance is when a buyer gains control over property in question for the amount that remains on the mortgage lien. The buyer will handle all monthly payments toward the lender without any involvement from the seller. Something to note is that because of this the buyer or the person handling all the payments will assume the terms and conditions of the mortgage.
Is a subject to transaction illegal?
A Subject to agreement is legitimate because there is break on the current agreement you have with the bank or the sale due date clause.
How are payments made to the bank from the buyer?
The buyer will most likely hire a company to handle all the automated payments to the bank.
Who is responsible for taxes and insurance?
Not only will the buyer take the responsibilities of the mortgage but they are also handling the taxes and insurances, as well as HOA fees, if HOA applies.
Does the buyer or seller provide Homeowner’s Insurance for the property?
The seller’s name will be replaced by the buyer’s name on the mortgage lien.
What additional fees are there with selling the property in a subject to
Unfortunately yes there are some fees when it comes to subject to such as real estate fees, closing fees, and finder fees.
What are the advantages of a sub to?
There are some advantages to being a seller in a subject to transaction. If the traditional cash offer are lower than your current mortgage then a subject to transaction is a good solution. Another advantage of being a seller in a subject to transaction is the financial burden you be facing like foreclosure, looking to make a quick sale, or improve your current credit.
What are the disadvantages of a sub to?
Its important to note that there are some downs when it comes to subject to. You don’t know if the buyer is reliable or not on making payments, so if the buyer misses a payment, than the seller will have to foreclose on the property. When something like this happens you get the deed back to your property as well as any previous payments made by the buyer to you or the bank.
Conclusion
Subject to agreements have the potential of being strong tools in getting buyers to obtain property at the same time help sellers with current financial problems and a good tool for investing in real estate. But both parties both seller and buyer need to know the risks that are in play with the deal as to avoid any problems.
To Learn more about Subject to head to Real Geeks.
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