Subject to Mortgage vs. Assumption of Mortgage
Considering the shortage of money and abundance of bad credit it’s no wonder these two terms are coming up more often. I’m not here to teach you how to broker either one of these deals, but rather just set you straight on what they are, define/clarify some terms and offer my input on some of the benefits, risks, etc. First and most importantly , let’s get the language down first. A subject to deal is not the same as an assumption which also means the terms are not interchangeable. Please… stop doing this. You will get yourself into major trouble by promising a deal using one term when what you are really intending to do is another – innocently or not. SUBJECT TO MORTGAGE A subject to deal is when you agree to purchase a property subject to the existing mortgage already attached to the property. This means the existing loan will not be satisfied at closing. In a conventional deal, that existing mortgage would be paid off at closing and a satisfaction and release o