Newbie Question
I'm a very new investor still doing research, reading, etc. One area I have not paid much attention to is SUB 2. A couple of comments on this site however, has got my attention. I plan on looking into this area of investing and learning all that I can but can someone explain to me how the whole sub2 works. If the mortgage is not assumable (which most are not these days) then how can this work. Please explain. Thanks in advance
rns
You do not assume the loan, you have the seller deed the house to you and you take over payments on the loan(s) that are still in their name. I believe most would say this is not to be used for properties you want to hold long-term.
oops, i just posted a similiar question in a new topic before reading this thread. but this looks like a good place for this question as well so here it goes...
doesn't signing a deed to the new buyer invoke the "due on sale" clause in the mortgage contract? I don't see how this is legal.
Do a search in google on this "Bronchick" and "due on sale"
You will find that a lot of people have made a lot of money by doing things that people say the due on sale clause would be initiated. You also might google this phrase: "land trust" and "due on sale" and also this one "garn st germain act"
GL
it's not illegal. it is just an "option" that the bank can take. there is no "law" being broken. if the bank becomes aware they have the right to call the loan due. if they call the loan dur youy will have approx. 3 months to pay, sell, or refi......km
the banks figured out that if there loans were assumed they were missing "fees" that they could charge in assuming a loan.........km
http://www.legalwiz.com/articles/dueonsale-rightframe.htm
Look into purchasing a sub 2 course. I got John Locke's and it's great. I started about 1 month ago and just closed on my 2nd deal today with another closing in 3 weeks. It works. I purchase properties lots of ways but sub 2 is always my 1st approach and a must for little equity deals. The DOS clause, I was scared at first then really looked at the big picture like foreclosures on the rise and that if they do call the loan due than they'll have another 1 to add to there portfolio.
Congrats on your deals ncboater.
Love those success stories.
John (LV)
RnS,
Here is a link that might help you understand the sub to process.
http://www.thecreativeinvestor.com/modules.php?name=News&file=article&articleid=146
Hope this helps
John (LV)
OK, so I think I understand a Sub2, but why in there right mind would someone deed a prop to me and expect I would pay the loan, possibly messing them up? I am also a newbie learning and sub2 seems interesting.