Posted by Phil on June 24, 2005 at 11:46:34:
A wrap, as the name says, “wraps around” the existing mortgage. Example: I have a 100K note on a home I own at 6 percent. I can finance this house for somebody else with a mortgage at say 8.5 percent, while leaving the orginal mortgage in place. I keep the 2.5 point spread between the two mortgages. SO I can make some money here.
Subject To or Land Contract? - Posted by Rocky
Posted by Rocky on June 24, 2005 at 09:02:09:
Does anyone have an opinion on the easiest and less intrusive way to acquire properties?
There is a lot of talk about suject to`s and very little about “land contracts” a/k/a “agreement for deed”.
Seems to me a simple land contract recorded at the courthouse would give you enough protection and all the rights to the property.
What do you think?
Rocky
Re: Subject To or Land Contract? - Posted by Randy (SD)
Posted by Randy (SD) on June 24, 2005 at 10:26:20:
As Greg(NJ) indicated one advantage in a “subject to” is you get the deed, this provides much more control. Either method can be used and sometimes you have to tailor your offer according to your sellers comfort level, some sellers are simply not comfortable deeding you the property with your contract/promise to pay the underlying liens where they would agree to a land contract or contract for deed.
Another underutilized tool is a note and warranty deed, sometimes referred to as a “all inclusive deed of trust”. Particularly beneficial when the seller is wanting some of their equity and are willing to wait for their cash. Like a “subject to” the property is deeded to the new buyer (you) instead of agreeing to take over existing financing the parties create and record a note. It’s advantageous to have the note serviced by an independent servicing company, payments are made to an impartial third party who pays the underlying liens, taxes and or insurance if desired, even profit to the seller. One significant advantage to the note is it is in marketable security on the secondary market. Meaning your seller does not have to wait for you to cash him out, he can sell his note in whole or a partial, he can trade his note, post it as security (commonly referred to as substitution of collateral) basically anything you can do with cash you can do with a note. When people understand the flexibility of a note secured by real estate, if they’re willing to consider subject to or a CFD they are much more receptive to a note because they can convert it to cash usually with in a few weeks.
Any competent real estate attorney or escrow company can create and record the necessary documents, you can download a free PDF note document at efanniemae.com:
http://www.efanniemae.com/singlefamily/pdf/3200.pdf
there is a wealth of free information and state specific mortgage documents, have fun.
Re: Subject To or Land Contract? - Posted by Greg(NJ)
Posted by Greg(NJ) on June 24, 2005 at 09:27:11:
With Subject to, you will make the payments for the seller, and get the deed NOW. SO the prop is yours, NOW. With a Land Contract, you don’t own it until ALL the payments are made. Big difference!
Re: Subject To or Land Contract? - Posted by Rocky
Posted by Rocky on June 24, 2005 at 10:46:53:
Isn`t that also called a wrap around mortgage?
Re: Subject To or Land Contract? - Posted by Rocky
Posted by Rocky on June 24, 2005 at 10:06:56:
Why is it so important to have the deed?
I thought the main objective was to “control” the property. A land conract gives you just as much control dosen`t it?
And in the worst case scenerio that you can`t fulfill your obligation to the seller, the seller gets their property back. A lot less of a gamble for the seller, therfore easier to close deals.
The “Contract for deed” is recorded which secures your position.
What am I missing here?
Rocky (possibly being a “rock head” in this case)
Re: Subject To or Land Contract? - Posted by Phil
Posted by Phil on June 24, 2005 at 10:58:29:
A wrap is something totally different.
Re: Subject To or Land Contract? - Posted by ron
Posted by ron on June 25, 2005 at 24:13:13:
remember you get the true warranty deed once you have paid all of the money and fulfilled your obligations.
So you can sell to someone else on a c/d but to truly sell an actual deed, you will need the deed,
what if the seller dies, what if the seller goes to Japan, what if the seller refuses to sign
You can avoid some of these hassles with properly handled pre-excution and having it all done by escrow, upon fufilled obligations in theory you would get the warranty deed at that point.
In my state it is a Contract for Deed
and if you get behind on your payments they can initiate to cancel the agreement as the seller and you can be out once initiated within 60 days.
with the actual deed you still own the house
You shouldn’t do either if you think you could possibly get 60 days behind though.
I can write up contract for deeds every day of the week, I am not yet proficient at subject to, I just haven’t really tried it, O work with semi-motivated sellers a lot, not too many super desperate sellers, but from those I’ve talked to subject to is typically a much more motivated seller that would to that.
Another thing to consider is if you put your hard earned money into the deal to reinstate the loan and catch up the amount in arrears, you now have your hard money into the deal and if that is the case, would you want a subject to or land contract?
aspd forum - Posted by aspd forum
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Re: Subject To or Land Contract? - Posted by Rocky
Posted by Rocky on June 24, 2005 at 11:25:50:
What is the difference?
Re: Subject To or Land Contract? - Posted by Brent_IL
Posted by Brent_IL on June 26, 2005 at 18:39:46:
The only difference is that the term ?wrap around mortgage? is usually used when the seller is taking back a junior-position purchase money mortgage while the term ?all-inclusive deed of trust? is usually used when an existing lender is the one that is making the payments on the underlying loan. A lot depends upon local usage convention. There isn?t any actual difference in the way that it works.