Many people come to us wondering how they can find freedom from the encumbrance of the weight of an unwanted mortgage. To Sell a house fast for cash may not always be a practical solution because there are many factors to consider, including the value of the home and the mortgage amount. That being said, there are other practical options available. One alternative, known as the Subject-To property transfer, is a worthy consideration as it offers advantages to both the buyer and the seller.
Subject-To agreements mean that the purchaser is subject to the seller’s current mortgage. The seller transfers the deed to the property to the buyer who takes over the mortgage payments rather than offering a cash remittance. The buyer benefits from this type of transaction because he assumes possession of a property without having to procure a loan. The homeowner profits because he is no longer hindered with an unwanted mortgage payment. The homeowner can sell their home quickly and be free of the financial strain of home repairs and upkeep. Because the buyer continues to make payments on the mortgage, the most salient benefit is the improved credit score that results for the seller.
While a Subject-To agreement offers appealing benefits for both the buyer and the seller, there are a few risks that should be carefully evaluated. The mortgage lender could demand full, immediate payment of the loan upon learning of the deed transfer. In addition, untimely mortgage payments from the buyer could result in foreclosure or repossession of the property by the lien holder. In this case, the seller’s credit rating would substantially decline. While these circumstances occur relatively rarely, these risks should be considered.
This type of transaction does invite a small degree of risk, but it also offers a favorable alternative for a homeowner threatened with foreclosure or who owes more than their home is worth. This solution also provides the seller with the possibility of a more financially secure future.