In real estate, creative financing encompasses a variety of unconventional buying and purchasing options. These methods provide pathways to finance properties with investors without the fees and costs of traditional home financing. Selling a home subject to existing financing is just one of the many options a homeowner can take to have the most favorable outcome for their home sale.
What Does Subject-To Mean?
“Subject-To” or “SubTo” is a way to transfer real estate where the buyer takes on the property title while the existing mortgage loan stays under the seller’s name. However, the buyer has the responsibility of paying that loan. In other words, the sale is completed “subject to” the existing financing remaining in place and in the seller’s name for the duration of the loan.
How It Benefits The Seller
Depending on the seller’s mortgage balance, this method may result in greater financial gain for the seller compared to a traditional sale. Homeowners who are in a low equity situation will likely find this method to be the most advantageous option.
What is a low equity situation?
- This is a circumstance where the value of the home is less than or equal to the amount still owed on the mortgage. In this situation, selling a home the traditional route leaves no money in the seller’s pocket. In fact, the homeowner would likely have to come out of pocket to pay for any repairs or closing costs during the traditional sale.
As a result, selling a property subject to existing finance lets the homeowner forgo ownership while avoiding the additional costs that are required when closing a home sale. Sellers can hand over mortgage payments without the obligation of repairs, maintenance, utilities, taxes, insurance, and HOA fees. Because the mortgage payments are now handled through the buyer, the seller may have an enhanced credit score due to the timely payments.
Quickturn Property Solutions is experienced in handling complex financial situations. We have the solutions and resources to assist you in navigating your home sale specific to your circumstances, including selling Subject-To.