Promised Land Properties

What is a Subject ToDeal?

Help out of a bad spot

A "Subject To" deal is a specialized form of real estate transaction where the property is sold "subject to" the existing mortgage. In other words, the buyer (in this case, us) takes ownership of the property, but the seller's existing mortgage remains in place. The seller deeds the property to us, and we agree to make the mortgage payments on their behalf, while taking ownership and responsibility for the property. This arrangement allows the seller to transfer ownership of the property without paying off the existing mortgage, making it an attractive option for sellers who are upside down on their mortgage but have a favorable interest rate.

Why Should I Want a "Subject To" Deal and How Does It Work?

How it works

In essence, the process of a "Subject To" deal involves us taking title to the property, receiving all mortgage statements from you, and taking responsibility for making mortgage payments on your behalf. While the mortgage remains in your name, we effectively become the owners of the property. You might wonder if this arrangement is legal. The answer is yes. Although many mortgages include a "due on sale" clause, in practice, banks typically prioritize receiving a performing note and a consistent payment over enforcing this clause. Therefore, as long as the mortgage payments are made on time, the bank is usually not concerned about the change in ownership.

What if you don't pay my mortgage?

While a "Subject To" deal relies on trust between both parties, we understand the importance of providing you with peace of mind. To offer a level of certainty and assurance, we employ various strategies, such as placing the title to the house in a land trust. This mechanism serves as a safeguard, ensuring that if, for any reason, the mortgage payments aren't made as agreed, you regain ownership of the house. In such a scenario, you would reclaim the property along with all the equity and improvements that we've made during our ownership. This approach helps mitigate risks and protects your interests throughout the transaction.

Why should i want a "Subject to" deal?

If you find yourself in a situation where you're unable to sell your house because you owe more on the mortgage than it's worth, or if the property requires extensive repairs or has outstanding taxes, a "Subject To" deal could be the ideal solution for you. This type of arrangement enables you to transfer ownership of the property without incurring additional losses. By deeding the property to us and allowing us to take over the mortgage payments, you can walk away from the property without facing financial repercussions. Additionally, in some cases, we may even be able to provide you with cash to facilitate your transition. A "Subject To" deal offers a viable path to financial relief and a fresh start, allowing you to move forward without the burden of an underwater property or unresolved financial obligations.

Will this hurt me from buying a house in the future?

Absolutely not! Participating in a "Subject To" deal does not negatively impact your credit score. In fact, it can potentially enhance it, as we make regular mortgage payments in your name. While it's true that you may encounter challenges securing another mortgage immediately afterward, typically within a year or so, obtaining financing for a new home becomes feasible. Our experienced team has assisted numerous individuals in securing mortgages for future homes following a "Subject To" deal. It's important to note that many people hold multiple mortgages simultaneously, such as those who own vacation homes. With our guidance and support, you can confidently navigate the process and achieve your homeownership goals.