Can you refinance a subject-to deal?

Hello, if you secure a property via subject-to, are there lenders that will allow you to refinance that property to pay the seller the balance owed, or are you required to do a new purchase transaction? I know some lenders will refinance a lease 2 purchase, but not sure about subject-to’s. Thanks in advance.

With a sub2 - the original mortgage is in place with the seller. It has nothing to do with you directly. You cannot refinance something you don’t have. You would need a new purchase loan.
Unless the seller has an assumable mortgage.

While it is possible, I would wonder why you would want
to go this route.
Isn’t the main benefit of buying a house sub2 is to
by-pass bank financing?

If you’re going to purchase sub2, THEN pay off the seller immediately,
you might as well forget the sub2 part and just get financing yourself.

If you purchase sub2, and try to refinance, some lenders may have
seasoning issues —seeing that you’ve owned the property for a short time.
Like I said…just go ahead and get financing initially.

Good luck.

Thanks guys. So basically, if I purchase a house subject to the existing payments, when the money is due to the seller (for the balance left on the purchase price), I would have to get a new loan, not just refinance it?

Hello Newby,
Are you currently in a sub 2 purchase ? It really depends on your sellers needs at the time that you purchase and your exit strategy for the property. At the inception of the purchase you should have a clear documented plan for you sellers letting them know approx. how long the loan will be in their name. Adjust uour exit strategy accordingly so every one wins.
If it is a long term hold get financeing like Jason suggests.
Are you thinking you buy sub2 back of market get refie with cash back at closing?

can buyer refinace within 30 days after the seller QCD to them?

You confused me here. If you own a house you aquired sub2, you cannot refinance it?

You’re thinking right, fadi.

Seeing that you bought the house, it’s yours
to do as you please.
Even though one has the deed and the mortgage is still in the seller’s name, that lien/mortgage will be paid off with the refi.
Sub2 doesn’t really make any difference in
the equation.
It is just the means to the end --owning the property.

some lenders are requiring 90 days on title to refi or sale a home that was originally sub2. some ask for 6months and other say 1yr on title.

if you want to sell a sub2 the same seasoning remains true…(weird)

Couldn’t the seller QCD it to you to allow you to refinance the property? Only reason I could think for the purpose to refinance it is to avoid capital gains, then sell to your end buyer. Especially if it’s an investment property or a property you have had for less than two years.

As for seasoning issues, I have been able to find lenders still that will do no seasoning.

Anything wrong with that?

I love all of the opinions. Yes you can and no you can’t. Call a local broker and explain the sitaution to them. And what they will tell you is this. YES you can refi a subject 2 and it is called a equitable interest refi.

As most broker have no idea what a subject-2 you have to explian it to them in imple terms.

Each lender will have certain guilines. Here are the guildines for First Horizons in MA.
-75% LTV
-equitable interest for 6 months or more (meaning yo have made the mortgage payment, paid the taxes, inurance, utilities, ext.)
-property wold have to be taken out of the land trust and deeded to the name of the person refi’ing. (not all lenders require this)

… and that is pretty much it. So yes you can refi a sub-2 and the guildlines will be specific to you region and situation.

Understand what you are saying before you say it!