Subject-To

Subject-to is a purchase where the buyer takes title to a property while the seller's existing mortgage stays in place and the buyer makes the payments.

Subject-to means buying a property "subject to" the existing mortgage: the deed transfers to the buyer, but the seller's loan stays in place and in the seller's name, and the buyer takes over making the payments. No new loan is originated. Sellers agree to this when they need out fast — behind on payments, relocating, carrying a house they cannot sell conventionally — and the existing loan terms are worth more to a buyer than a discounted cash price.

The question everyone asks: what about the due-on-sale clause? Most mortgages give the lender the right to call the loan due when title transfers. That is a real provision, and experienced subject-to buyers go in understanding it and structuring accordingly. The other structural fact is that the loan continues to affect the seller's credit — on-time payments help, and missed payments hurt someone who no longer owns the house.

Beginners get subject-to wrong by doing it on a handshake. A real subject-to closing runs through a title company or attorney, with proper deeds, disclosures the seller genuinely understands, and third-party loan servicing so every payment is documented. Done sloppily, this structure damages real people; done properly, it solves problems cash cannot. Work with professionals who close these regularly — this is not legal or tax advice.