Subject To question

I received a question from Paul about buying a property "subject to" the existing financing.

"I was talking to the neighbor about her situation and it occurred to me that she is a classic motivated seller. I still need to gather information about her loan/title, so I'm not sure yet if the numbers make sense. I think that a "subject-to" deal is the best option for me. Can you recommend some reading material or another resource where I can educate myself on "Subject-to" deals? My intention would be to hold the property long term as a rental. How do I deal with the bank if/when they eventually find out about the sale? Thank you."

Go to the library & look for any book on real estate financing. Look in the index to see if they discuss subject to. I would recommend any book by John Schaub, especially Building Wealth One House at a Time. Most of his books include & describe "subject to". There is a workshop on Jan. 30th. I know both instructors use subject to & seller financing to buy. (www.investorsworkshops.com, then click on events)

You just make an offer subject to any existing financing without formally assuming the loan. You have the moral responsibility to make the payments but not the legal because the loan is still in the name of the original borrower. I prefer to notify the lender on what I intend to do to get their formal blessing (in writing) because I want them to also allow a sale to another buyer after me. If I don't get the blessing, I still may do the deal however there is the possibility that the lender may call the loan due. Currently, I'm not worried about getting a loan called because I lenders have too many foreclosures and loans that are not paying.

When I take over a loan, I always improve the original borrower's credit score because I make the payments.