Subject To
What is 'Subject-to' Financing?
Taking over existing payments - while the loan stays in the seller's name.
In a seller financed deal, who typically holds the title to the property during the financing term?
The buyer holds the title while the seller holds a lien secured by a note and deed of trust.
What is a wraparound mortgage?
A loan where the seller finances the buyer while still paying the underlying mortgage.
What's the difference between hard money and private money?
Hard money comes from companies with strict terms; private money is more flexible and comes from individuals.
Who remains on the loan in a Subject To deal?
The original seller stays on the mortgage.
What terms are typically negotiated in seller financing?
Down payment, interest rate, monthly payment, and balloon date.
You've acquired a home with seller financing. Whats an exit that lets you collect monthly cash flow.
Wrap the seller financing and resell with a note at a higher interest rate.
Which option would be the best for this Scenario?
Property is Free & clear; seller wants to avoid capital gains
Seller Financing
How do you protect the seller in a Subject To deal?
Use a land trust or wrap note, keep payments current, and provide transparency.
You offer 0% interest to the seller over 5 years. Why might the seller still agree?
Because they get consistent monthly income and possibly a higher purchase
How do payments work in a wrap deal?
The buyer pays the seller, and the seller uses those funds to pay the original mortgage.
Seller has 2.75% Mortgage, owes 180k. Wants 10k walk away cash from the property. Market rent supports the PITI of the loan. Which strategy would be best?
Subject-to
What's the biggest risk to a seller in a Subject-to?
Foreclosure, legal exposure if buyer defaults.
What legal document secures the sellers position in a seller-financed transaction
A promissory note
In a warp-around mortgage, what risk does the Due on Sale Clause pose?
The original lender may call the loan due if they find the title change.
How does a wrap differ from a Subject To deal?
A wrap includes a new note between buyer and seller, whereas Subject To keeps only the original loan.
How do you explain a Subject To deal to a skeptical seller?
It helps them avoid foreclosure or offload a burdensome property without new debt.
How do you calculate a balloon payment in seller finance?
Subtract the amortized portion paid from the principal to find the remaining balance due.
Describe how title and liens are handled in a wrap.
Title transfers to the buyer, but the original loan remains as a lien; the wrap lien sits in second position.
Explain a deal that combines Subject To and a wrap.
The investor buys Subject To the existing loan and creates a wrap loan to sell to a new buyer at a higher price and interest rate.