Can someone please explain "Cash to Mortgage"? - Posted by Chris

Posted by Ed Garcia on September 01, 2000 at 10:58:07:


My first reaction wants to say YES, except, I don’t know what state your in. I’m now doing loans in 42 states and have yet to find a state that the loan cannot be assumed.

In most cases, loans that are adjustable are assumable and loans with fixed rates are not.
I have a borrower who has a loan with Ames Mortgage who is going through a rate increase. The loan has a pre-pay in it in the amount of $7,500. After educating the borrower as how to approach Ames and handling their pre-pay, Ames dropped the pre-pay. You see in most adjustable loans there is a window of opportunity to pay off the loan when experiencing a rate increase.

If you are saying that we shouldn’t be assuming loans when purchasing a property, I think that would depend on the loan, the cost of the loan, and what are my intentions with the property.

If I’m purchasing a property and it has an existing loan at a great rate, which may have been on the property for 13 to 15 years and the loan was originally written for 30 years. I only have 15 to 17 years left on the loan and now that loan is paying down more towards principle rather than just interest. If I purchase the property as a keeper or a hold property, then yes I want to assume the loan.

If the loan is a fixed loan, there still are other ways the loan can be assumed, that I cannot and will not teach on the net. If you think I’m talking about a Pac-trust or land contract, I’m not. By the way, the reason I won’t teach it on the net is not because it’s illegal, but because it’s not a reliable technique.

But yes Rick, I think it could be used in a “SUBJECT TO” however, generally, CASH TO LOAN, means just what it is says, the buyer paid cash to the loan.

Ed Garcia

Can someone please explain “Cash to Mortgage”? - Posted by Chris

Posted by Chris on August 31, 2000 at 10:02:10:

I have heard this mentioned before in passing, but never really understood what is meant by “cash to mortgage”. What does it mean, in what type of a situation does this take place?

Re: Can someone please explain “Cash to Mortgage”? - Posted by Ed Garcia

Posted by Ed Garcia on August 31, 2000 at 10:33:00:


When you do cash to loan or cash to mortgage. What you’ve done is, paid the seller the cash difference between the sales price and the loan balance. In doing so, you assume the sellers loan or mortgage.

Ed Garcia

Ed, for my clarification, … - Posted by Rick Wheat

Posted by Rick Wheat on September 01, 2000 at 03:19:40:

couldn’t that also mean the cash difference between the purchase price and the mortgage balance you take “SUBJECT TO”, since we don’t assume loans around these parts?


Rick Wheat