I am getting a few objections from sellers and would like to hear how others deal with them.
What if you stop making the mortgage payment?
What about their debt/income ratio if they go to get a loan on a new house before I turn the old one?
As you probably know there are a couple of ways to do a subject 2. I use a NARS land trust for a subject 2.
- With a land trust, if you miss a payment, you are simply evicted and the seller has two payments in reserve so that he doesn’t miss a mortgage payment while he’s kicking you out the door and replacing you (or your tenant).
2.With a land trust you have a NNN lease with your tenant. Lenders usually ding your debt-to-income ratio about 25%. However, the Trustee sends a letter indicating that you have no exposure to maintenance and repairs or vacancies. In my own case with my home, the new lender readily accepted it. This is standard with this type of transaction.
I’m sure others here will answer your question as to how these situations will affect you using their method. Best of luck to you.