SELLING YOUR HOUSE
“SUBJECT TO THE EXISTING MORTGAGE”

 

What Does It Mean To Sell Your Home “Subject To The Existing Mortgage?”

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Selling your home "subject to the existing mortgage" is a transaction where the buyer purchases the house and makes payments on the existing mortgage after closing.  As the property's new owner, the buyer will now be responsible for paying the mortgage payments, the property taxes, the insurance, the HOA, and any other obligations related to the home.  Selling your home "subject to the existing mortgage" is a practical option for homeowners with low equity, liens, or missed mortgage payments.  As buyers using this method, we are commonly able to provide homeowners with more cash at closing than they would receive if the house were sold traditionally after accounting for realtor commissions, settlement expenses, seller concessions, required repairs, closing costs, and the remaining mortgage balance.

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We serve as a viable solution for homeowners that no longer desire to continue making payments on their long-term mortgage debt.  For homeowners in distress, we can help them avoid foreclosure, short sales, and bankruptcy, which are all events that would have a severely negative impact on their credit.  While taking over the mortgage payments on the home, each timely payment made on the mortgage helps restore and build the seller's credit.

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As part of our offer to purchase your home "subject to the existing mortgage,"  we will agree to buy the home in "as-is" condition with no repairs needed.  As a convenience to you, we will also cover all closings costs so that you have no out-of-pocket expenses. The closing can be set on a date that is convenient for the seller and as part of our offer, we will negotiate a direct cash payment to be paid to the seller at closing based on the home’s condition, mortgage terms, and equity. 

 

The purchase price of the home will be calculated as follows: 

(Unpaid Mortgage Balance) + (Cash Payment) = Total Sale Price

Sales Price Example:  $150,000 (unpaid mortgage balance) + $10,000 (cash payment paid to seller at closing) = $160,000 Sale Price

 

 

 

In Which Scenarios Should A Homeowner Consider Selling Their Home Subject To The Existing Mortgage?

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Selling your home subject to the existing mortgage remaining in place is a viable option under the following circumstances:

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*Homeowners with no or low equity where they would have to bring cash to closing or would receive minimal cash at closing after paying all closing costs, realtor commissions, required repairs, and settlement expenses

*Homeowners who are behind on mortgage payments or facing foreclosure

*Homes requiring extensive repairs that would not pass a traditional inspection

*Homeowners who need to close quickly to receive the cash fast

*Homes with high days on the market where the seller is experiencing rising costs and expenses

*Homes with unpaid liens (federal, state, child support, HOA) or other debt obligations (solar panels, water softeners, plumbing, etc.)

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Are you a motivated seller? In real estate, a motivated seller is a property owner who has a strong need, not simply a desire, to sell their property. Their need to sell often motivates them to agree to either a discounted cash offer price or flexible financing terms. The phrase "motivated seller" in real estate can mean several different things. But, primarily, the term signifies that the property owner is eager to close the deal on a piece of property quickly. The desire to close quickly can be for any number of reasons, the following are some of the reasons why people are motivated to sell the property quickly:

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• Life situations – Sellers are motivated to sell quickly due to factors like separation, divorce, and the birth or death of a family member

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• Relocation – When a new job requires relocation, the property owner might want to sell quickly

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• Vacancy, neglect, or extensive repairs – When a property falls into disrepair, the owner might not be able or willing to spend money on renovation or repairs. They would rather sell their home quickly as-is

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• The threat of foreclosure – When a property owner cannot keep up with mortgage payments, they will want to sell quickly to avoid foreclosure

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• Inheritance – If an heir is unable to manage an inherited property, they will be eager to sell fast and close the estate