Refinancing A Sub 2

Comments(6)

• 
  jeff120024th February, 2004

  It's not really re-financing. Since you are not on the loan that is in place, refinancing is not the correct terminology to use. You, or your buyer can bring new financing into the deal satisfying the existing financing. You have title to the property, you can borrow against it.
  Jeff

• 
  JohnLocke4th February, 2004

  KnowledgeJunkie,
  
  When you sell on a Contract for Deed in a Subject To deal, you create a note (Loan) with your buyer. You set a time period in which your loan to him is paid off normally two years.
  
  Since you have created a loan you are having your buyer "re-finance" his loan that he owes you, in this process your sellers loan is paid off also.
  
  Keep the two separate ( your note & your sellers note) they are not the same.
  
  John $Cash$ Locke

• 
  InActive_Account4th February, 2004

  Jeff & John,
  
  Thanks for the reply. I understand. The term kinda threw me.
  
  p.s. John, I'll be buying your course VERY soon. 1 more future sale.
  
  THANKS!

• 
  InActive_Account4th February, 2004

  Another question if I may.
  
  EXAMPLE
  
  BUY
  I buy the prop SUB 2, which means that I agree to make the payments in th future
  
  $100K purchase
  $1K U-Haul money for his $10K equity
  $90K seller still owes to bank
  $595 month payment that I take over from 7% Interest rate(on the $90K)
  
  I offer to buy SUB 2 & keep making the payments so his credit is saved(assuming pre-foreclosure), he can get out of the house. He loses the $10K equity. Well, $9 really
  
  SELL
  I sell to a buyer on a CFD, which basically means that he must fullfill the contract to pay me off or refinance in 2 years to get the DEED
  
  $110K Sale Price
  $10K (-1K from U Hall $$) 9K PROFIT
  If the buyer can get a hard money loan then I just use those funds to pay back the sellers loan plus my spread. (10 K PROFIT)
  
  ...or If I I take back a $100K mtg @ 9% for a monthly pmt of $800. $205 Month profit. So, I put this knew seller on a 30 year mtg, due in 2 years. A balloon. He must pay off in 2 years. When he does I pay off the old loan plus my DWN PMT profit & monthly spread profit.
  
  Does that sound right?
  
  Did I make this too confusing?

• 
  Foto-G6th February, 2004

  Your first sell scenario: I think you should just refer to it as 'new financing.' Hard money has a meaning that I don't think you really mean in this context. But, yes, if the buyer brings in new financing for the total amount, then you pay back the loan to the seller and walk with your profit. The settlement agent will make it happen, because as part of your sale, you'll have to deliver clear title, so the previous lien has to be resolved. So you're not selling on CFD.
  Oh, ... and your profit is 19K, not 10, right? (buy 91, sell 110).
  
  The second scenario is what will happen if you sell on CFD. Your profit will consist of your monthly spread 'till he gets his financing, then you'll get the bulk of the profit at that time and the previous mortgage will be paid off (as above).
  
  -Vince

• 
  InActive_Account6th February, 2004

  Vince,
  
  Thanks for the reply. So, in the second sell scenerio you wrote "When he gets financing". When should I make this be? Should I put in the contrcact that he has to do it in a certain number of years? I guess that kinda depends on the financing I have structured with the original seller.
  
  THANKS!