A Q on Sub-2

A question on Sub-2

I am visiting a seller this weekend who “Doesn’t want to make any money, I just need someone to take over payments.” Is looking for someone to take over their payments. The loan is FHA Assumable, but I am thinking Sub-2 to get a title.

Also, they have verbally committed to signing a release authorization to get the loan details from the bank. I understand I need them to sign that document, but how do I tie up the property while I do me research? Do I do a standard contract write in “Existing Financing?” I cannot find any sample offer forms for a subject to.

Thanks in advance,


Assumable mortgage? how old is the loan? if it is an old loan, you better keep it as a rental since it will be paid off quickly!

In any case, if the assumption does not require approval, you could assume it…

If you want to buy it on sub2, it depends on the contract… I usually use the assumption clause in the contract, scratch the word assumption and write “taken subject to existing mortgage”… but again, it all depends on the contract. You could also have an addendum explaining the terms of the transaction.

It’s a 9 yo loan, almost 10. It’s standard FHA, so I would probably have to qualify and if I can keep it out of my name, all the better. The loan is current.

So I just use a standard sales contract?

The word standard scares me :slight_smile: there is no standar sales contract… I assume you are talking about the contract realtors use? it really depends on what the contract says, but thats what I use. I use the TREC (Texas) contract.

FHA loans have always been assumable. FHA loans can not be assumed by investors. For the past several years, the restriction on FHA loan assumption is that the buyer must owner occupy the property and must qualify. This same restriction is in place for nearly all conforming loans originated in the last twenty years.

Purchasing subject to the existing financing will achieve the same result as a loan assumption.


I think it’s pretty obvious this is my first sub-2 deal and instead of me just poking me around, I could really use some constructive criticism from a seasoned investor. I have MY standard “Purchase Agreement/Cash Offer” contract that I have used several times for an outright purchase. If there is a pre-formatted “SUB-2” contract available that someone would like to share, or know of a link to get one, it would be appreciated.

------ UPDATE ------

They are ready to sign.

They have copies of the actual mortgage, statements, and authorization to release information ready for me.

Q1- I still don’t have a “SUB-2” contract. I can try to modify my Purchase Agreement, or tie up the property with a letter of intent.

Q2- When I get the “authorization to release information,” would it be prudent to have it notarized?

A1 just type in it taken subject to existing mortgage
A2 no, just their signature

Thanks. I appreciate that.