Today's track: Pail of Water — Barbarisms

Some houses come with a loan attached that no bank will ever write again.

A 2.75% loan. A 3% loan. Sitting inside a house that's for sale right now, and the next buyer can take it over.

That's an assumable mortgage. When I ran our MLS (Multiple Listing Service), 26 active listings in Kentucky were flagged assumable. Out of roughly 4,500. They run from $120,000 to about $675,000, from Louisville out to Shelbyville, Mt. Washington, Elizabethtown and Brandenburg.

Twenty-six. That's the number that's labeled. So I went further — searched every active Kentucky listing's public description and every agent's private remarks for the word itself. Found five more that mention it and never got the box checked, here they are. Thirty-one total, and that's still only the ones somebody wrote down.

Nearly half of every mortgage in America is under 4%. Most sellers have no idea their loan is worth something to the next buyer. So the deals aren't scarce. The labels are. That's your opening.

Here's how it works, how to find the ones nobody flagged, and what to do this week.

One thing to know up front: FHA and VA assumptions are for people who'll live in the house. An investor buying a rental can't assume one. For investors, the play used to be subject-to, now we are team land contracts (no due on sale close violation) which I'll get to at the end.

A $250,000 house. The seller has an FHA loan from 2021 with $200,000 left at 2.75% and 25 years to go.

That's $412 to $495 a month in your pocket.

Now the interest. Over the life of the loan, the assumed 2.75% costs about $76,800 in interest. A matching new loan at 7.03% costs about $225,200.

About $148,000. Same house. Same buyer. Same week. The only difference is which piece of paper came with it.

You only take over what's left on the loan. On that $250,000 house with $200,000 owed, you need to cover the other $50,000, plus a servicer fee (FHA caps it at $1,800) and closing costs.

That gap is why most assumable loans never get assumed. Three ways through it:

Even with a second loan on top, the blended payment often still beats a brand-new loan, and the 2.75% loan keeps riding for 25 years while you refinance the small one later.

One more number to plug in: the assumed FHA loan keeps the seller's mortgage insurance. A 2021 FHA loan usually carries 0.85% a year, about $142 a month on $200,000. It doesn't kill the deal. Put it in the math.

If it's listed, call the listing agent:

"Is the seller's loan FHA or VA? If it is, my buyer wants to assume it. Your seller gets a buyer who pays close to asking, because the payment works, and the house sells this winter."

To the seller, it sounds like this: your loan is an asset. The next buyer will pay for it. You can use it to get your price.

Subject-to means the buyer takes the deed and the seller's loan stays in place, in the seller's name. No lender approval, no fee. This is the version investors use.

It's legal. It's also callable: nearly every mortgage has a due-on-sale clause that lets the lender demand the full balance when the house changes hands. How often that happens, nobody has good data on.

Done right, it means three things: a third-party servicer collects and pays the loan every month, the insurance names both buyer and seller, and the seller understands in writing that they are still on that loan. Never tell a seller they're "off the loan." They aren't.

This is exactly where my good friend Andrew Schlag lives. If subject-to is the tool that made you sit up this week, reply "ANDREW" and I'll connect you.

Here's what I promised earlier. A land contract (also called a contract for deed) gets an investor the same result as subject-to — you control the house without qualifying for a new loan — but it moves a different piece of paper. The seller keeps the deed. You sign an installment contract instead, take over the house and the payment, and nothing records at the courthouse saying the property changed hands. Not until the last payment clears and the seller finally deeds it over.

That's the "no due-on-sale violation" I keep bringing up. Subject-to hands over the deed on day one — that's the transfer the due-on-sale clause is written to catch. A land contract holds the deed back the whole time, so there's no recorded transfer sitting there for a lender to find. It's not a guarantee. A servicer that goes looking can still argue an installment sale counts as a transfer of an interest in the property, and nobody tracks how often that argument gets made either. But it's a much quieter paper trail than handing over a deed, and that's why my team runs land contracts now instead.

One thing if you're doing this in Kentucky: don't write the buyer's default clause as a forfeiture — miss a payment, lose the house, keep what they already paid. Kentucky courts killed that twice, in 1979 (Sebastian v. Floyd) and again in 2012 (Slone v. Calhoun). Your only real remedy on a defaulted land contract here is a judicial sale, the same court process as foreclosing a mortgage. A land contract solves the due-on-sale problem. It doesn't get you a faster eviction than a bank has. I broke that 1979 case down in full last week in Thirty-Nine Percent.

Reply "LAND" and I'll walk you through how we structure these.

Assignments, novations, seller financing, lease options, assumptions. Five answers to the only question in this business: what does this person actually need, and can I be the one who has it?

You don't need to master all five. Be dangerous with two and know who to call for the other three. Cough, Winner Realty, Robby (always there to help AI at your finger tips).

Here's the assignment. Pick one tool. Go find one property it fits. Not a deal, one property. Then send the offer with two options on it instead of one, and watch what happens to the conversation. I’ll draft them myself!

Inventory keeps climbing. Rates are back over 7%. The people who need to sell this winter are going to need somebody who can do more than subtract 30%.

Be that person. The seat is wide open.

I don't know a seller who'd do it — 50%. I don't have the paperwork — 33%. I don't know a tenant-buyer — 17%. Nothing, I'm sending one this week, and I'm just here for the song — 0% each.

Same wall every time: it's not the tool, it's finding the first yes. That's exactly why the math leads today's issue instead of the vocabulary — nobody needs to know what a land contract is to hear "$412 more a month, same house, same week."

Results tomorrow.

Want all five tools from this week in one email? Reply "TOOLBOX."

🏆 The Top Five is ready as always: the five best deals on the Louisville MLS this morning, five lowball setups, and my math on every one. Rules say I can't mass-send other agents' listings, so it goes one-to-one. Reply "FIVE".

With Enthusiasm,
Rob Bergeron

Owner–Realtor at Award-Winning Winner Realty
Winner Realty: (502) 305-8915
Winner Realty | OffMarket.deals | Property Partner Data Company

Schedule time to discuss your goals, bottlenecks, or whatever’s on your mind — book me here.

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PS: Go shopping. Live on the MLS, all people who could use a second option:

PSS: Four of my most-read issues ever went out these last few weeks — all with over 44% of you opening them: Truth and Lies, The Paper Is the Asset, You Stay on the Deed, and Olmsted Designed Your Property Value. If you missed any of them, go back and check them out — people have told me they got a lot out of all four.