Refi On A Sub-2
Hi all,
I have read a lot here about the DOS and how a good mortgage broker on your team could get you a loan if DOS was ever invoked because you now own the house and so on....
If that is the case, then why not get a new loan as soon as you get title and let the seller off the mortgage hook? The terms may not be as attractive as the original loan but isn't that the same boat you end up in if and when DOS is called?
Thanks,
B.
Closing costs and prepaid ecrow could eat up a lot of money. If there is enough equity after paying that it might work out, but sometimes those costs can come up to $5,000 or more. That might be one reason, I am a rookie at this Sub-To stuff, but I am a mortgage broker that knows about that side of it.
That is right on the mortgage side of it, as an investor how many conventional loans can you do before your debt to income ratio is going wackey and you need a fork lift to move your credit report?
As long as you have positive cash flow your debt to income would stay the same. The money from the rents would wash the monthly mortgage payment. Most conventional lenders use 75% of the gross rents to determine income. For example, if you have a home that brings in $1,000/month rent, the lender would look at it as $750. If your monthly expenses are $800, you are still making $200 cash flow but the lender only looks at it is $50 more debt a month.
Great explanation for the Newbie in Subject To!
Eric & Rosa
[addsig]
Another thing you have to worry about is seasoning when it comes to refinancing. Some lenders may not do a loan if you onwed the home for less than 6 months to a year.
Another thing that can be done is to have a blank lease agreement signed by the seller. Don't date it. If the bank has a problem and they try to call the note, you can show them the lease agreement that you have with the seller and it should be fine. It is my understanding that a person can rent their home for up to 30-35 months before a lender can inforce the DOS. I would check into that, but it's good to have the rental agreement just in case.
Hoped that helped~