Subject To Real Estate
In a subject to deal, the existing financing that a homeowner has in place is taken over by an investor. This option is essentially paying for the mortgage that is already in place through a signed agreement with the homeowner.
This option works well for people who are behind on their mortgage. with little equity, and would be okay with moving out of their home. The investor pays for the behind balance on the mortgage and avoids the homeowner from going into foreclosure.
Many lenders have written in a due on sale clause into a mortgage that prevents someone else from assuming the mortgage. A lender can invoke immediate payment on the rest of the mortgage if suspicion of mortgage assumption is made.
Homeowners and investors often get around this clause by creating a contract that grants the deed, but does not grant the existing mortgage liability.