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Yes, it will be taken out of any down payment to the seller or negotiate in your commission with the buyer to pay for it.

1. Finding a Motivated Seller Scenario: A homeowner, let’s call her Sarah, is struggling with payments on her property due to financial hardship, divorce, or other personal reasons. Sarah needs to sell the house quickly but does not have the equity to sell it traditionally. She’s open to a Subject-To offer because it allows her to walk away from the property without worrying about paying off the remaining mortgage balance. Key Point: The seller is motivated to sell and wants to avoid foreclosure or keep their credit intact. This creates an opportunity for the buyer. 2. Analyzing the Property and the Existing Mortgage Scenario: Sarah’s home is valued at $200,000, and she still owes $180,000 on her mortgage. The interest rate on her mortgage is 4%, and there are 20 years remaining on the loan. Key Point: The buyer needs to determine the current market value of the property, the remaining mortgage balance, and the mortgage terms. In a Subject-To deal, the buyer takes over the existing loan payments without assuming the loan personally. This means the original loan remains in Sarah’s name, but the buyer will be making the mortgage payments directly. 3. Structuring the Offer The buyer makes an offer to Sarah: • Offer Price: $200,000 (the market value of the home) • Mortgage Balance: $180,000 (the current amount owed) • Monthly Payments: The buyer agrees to take over Sarah’s monthly mortgage payments of $1,200 (including principal, interest, taxes, and insurance). Key Point: The offer is structured in a way that the buyer does not need to get new financing. Instead, they continue to make payments on Sarah’s existing mortgage. The buyer takes ownership of the property “subject to” the existing financing. 4. Signing the Agreement The buyer and Sarah sign a Subject-To Agreement, which typically includes: • Deed Transfer: Sarah transfers the deed of the property to the buyer, making them the legal owner. • Mortgage Continuity: Sarah’s mortgage remains in her name, and the buyer agrees to make the payments on her behalf.

1. Property Details - Property: 123 Main St, Exampletown, USA - Purchase Price: $200,000 2. Down Payment - Amount: $20,000 (10% of the purchase price) - The buyer provides this amount upfront as a down payment, reducing the amount to be financed. 3. Amount to be Financed - Amount: $180,000 (Purchase Price - Down Payment) - This is the amount the seller will finance for the buyer. 4. Interest Rate - Rate: 5% annual interest - This is the interest rate agreed upon between the buyer and the seller. The rate should be clearly stated in the agreement. 5. Term of the Loan - Loan Term: 15 years (180 months) - The length of time over which the buyer will repay the loan. 6. Monthly Payment - Payment Calculation: Using an amortization schedule, the monthly payment would be approximately $1,419.47. - This payment covers both principal and interest. You can use an online amortization calculator or a formula to calculate the exact monthly payment. 7. Balloon Payment - Balloon Payment: $150,000 due in 5 years (at the end of Year 5) - In this case, the loan is structured with a balloon payment, meaning the buyer will make regular monthly payments but must pay off the remaining balance in full after 5 years. - The balloon payment is calculated as the remaining balance of the loan after 5 years of payments. 8. Repayment Schedule - The buyer will make monthly payments of $1,419.47 for 5 years, and then a lump sum balloon payment of $150,000 at the end of Year 5. - If the buyer is unable to pay the balloon payment at the end of 5 years, the seller may offer a refinancing option or a renegotiation of the loan terms. 9. Late Fees and Default Terms - Late Fee: $100 if payment is more than 15 days late. - Default: If the buyer defaults (fails to make payments), the seller may have the right to foreclose on the property, taking ownership. 10. Security/Collateral - Collateral: The property itself (123 Main St, Exampletown, USA) serves as collateral for the loan. - In case of default, the seller can initiate foreclosure proceedings to recover the loan balance.