"Subject to" question
Greetings all,
I have a theory in my head, but would like some feed back if it would be kosher.
Could I as the buyer, purchase a property with the "Subject To" financing to get my name on the deed. Then simotaniously, I would get a bank to refinace the existing 1st mortgage and get the sellers name off the mortgage all together. (The sellers are getting a divorce and don't want to keep that "subject to" in place.)
At the same time obtain a home improvment loan using the same home I just purchased, and give the sellers the desired money for the equity they already have invested in the home.
Does anyone see a flaw in this plan? 
Thanks in advance
Goofy1
Yes, if your credit is good, then you could purchase the property subject to, and quickly refinance, thereby paying off the existing mortgage. You will have to find a lender that will refi with no seasoning on title. Interest rate will likely by higher and LTV will be lower (about 80% of appraisal).
I'm not sure why you're trying to obtain a second home improvement loan. Refinances are based on the appraisal, not the purchase price. You should be able to pull any money out of one loan.
You don't offer any figures, but are you sure this is a good deal. For example, house appraises at $100K, but for a quick sale, owners agree to sell at $70K. If deed is in your name, then you can borrow $80K, pay off the sellers and pocket $10K. Make sure that the home will still cash flow after the refi.
Roger
Goofy1,
Glad to meet you.
If you are a glutton for punishment by not thinking creatively but conventionally you could do it the way your were talking about.
Let's see here divorce, need out of the house and they are dictating terms to you. They need help you are the Doctor they have pain, you have the cure.
Leave the loan in your name Folks, I use a Loan Servicing Company to make sure your payments are made on time, and I have buyers that can in about 2 years possibly refinance thereby taking the loan out of your name, this is the normal time in which this happens.
Short synopsis for you, however, using a scripted presentation with the 'close the deal' built in makes it very easy.
Welcome on board this board, bottom line I am a creative real estate investor, conventional thinking is not in my vocabulary.
john $Cash$ Locke
Thanks for the timely response!
My thought on the home improvement loan was this......
Example:
The balance on the existing 1st mortgage is $75,000. The asking price is $100.000. We negotiate the price to $85,000. Now if I were to do a "Subject to" deal and make the payments on the $75,000 the seller will still want the $10,000 difference. So I thought that I could get the home improvement loan to get the 10k for the difference.
Ya know I am probably making this more difficult then it has to be! I think I have information over load-too many real estate books!
Thanks
Goofy1
I'd say if anything do the home improvement loan for the 10K (although I'd see if there's a way to work the 10K down first, if not so be it)
Keep the 1st loan in their name if they want to refi for a lower interest rate great gives you move room to play with.
Find yourself a buyer, don't know how much you'll be able to make on the down payment with it costing you the 10K.
If the sellers don't want to deal give them your card and walk. When they decide that they want to deal they'll get back in touch with you.
Goofy1,
Follow John's advice first; you are the remedy for their pain. You decide the deal, not them.
Second, learn some quick negotiating tactics. Do an article search for Bill Young and read his articles on financial judo. In short, prove to the sellers that they don't have that much equity.
If you're okay with the $85K price, have them refinance it for that amount and then take over subject to. No extra loans, and no extra payments.
Roger
Thank to all who responded to my posts!
It is great to talk to a group that understands creative real estate.
It doesn't pay to talk to anyone else about it because they don't think that it can be done, so they look at you like your crazy
Thanks Again
Goofy1
Goofy1,
You are right they either look at you like you are Crazy or Goofy.
John $Cash$ Locke