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By: peter V

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As you can probably imagine, when you are doing a subject-to deal you need to examine the terms of the mortgage agreement very closely. After all, there are a lot of advantages to doing subject-to deals, but all of these can go right out the window if you end up with a mortgage that does not meet your needs. While every situation is different, you have to be able to review the mortgage yourself – and possibly with your lawyer – to be sure that the lending documents and terms meet your requirements.

To get your hands on the mortgage, you must work with the current holder of the lien and the borrower. The lender will not simply give you the loan documents because you are curious, and you generally want to avoid telling the lender that you are considering a subject-to transaction. While it is very rare, especially in the past 3 decades and logically through the foreseeable future, some mortgage companies dislike subject-to transactions and can make things difficult for you if they know this is what you and the seller have in mind. Instead, simply get on the phone with the seller and the lender, and have the seller officially give you power-of-attorney over the loan or at the very least (prior to getting the house under contract) you need the power to ask and have answered any questions that you might have for the lender.
Once you have access to the loan document, read carefully. Look out for variable rates, which sellers may try to gloss over since they are a big red light and will kill almost every deal unless the buyer has alternate financing. Also keep an eye out for balloon payments that may be due every 5 to 10 years. These payments are not necessarily easy to spot, and it is not guaranteed that your seller will point them out.
Additionally, check out the escrow. Determine whether you can drop the existing homeowner’s insurance and get your own. You, or whoever lives in the property, will likely need an additional policy to cover your own things in the event of a catastrophe, and if you will not be able to drop the other policy you could end up paying double. You also need to be sure that the property taxes are manageable, since high taxes not included in the mortgage payment can come as a nasty surprise in the fall.

As always, all of this advice is purely educational and designed to help you avoid real estate investing mistakes. You should review every deal with your own legal advisory team to insure that any given subject-to investing deal is right for you.

Peter Vekselman has been successfully investing in real estate since 1996. He has completed over 1200 real estate deals, owned a construction company, been a private lender, and owned a property management company. Peter currently works with clients all over the US helping them achieve riches in real estate.

If you are interested in talking with Peter further about his private real estate coaching program please email him directly at peterv@pvretraining.com with your full name and all your contact information along with “why you need a mentor / coach”.
Peter Vekselman has been successfully investing in real estate since 1996.

He has completed over 1200 real estate deals, owned a construction company, been a private lender, and owned a property management company. Peter currently works with clients all over the US helping them achieve riches in real estate investing. For more information please visit
www.CoachingByPeter.com.

Article Source: http://depositarticles.com/

Peter Vekselman has been successfully investing in real estate since 1996. He has completed over 1200 real estate deals, owned a construction company, been a private lender, and owned a property management company. Peter currently works with clients all over the US helping them achieve riches in real estate investing. For more information please visit www.CoachingByPeter.com.

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