Greetings once again fellow cyber travelers! We are now on the final leg of our journey into the gripping world of mortgage loans. It was one heck of a ride wasn't it? So now we will begin by explaining to our lovely audience just what a wrap-around loan is.
A wrap-around mortgage loan is like setting a second financing option (like a second "help button") if you will. This is when the person who is selling decides to give the person who has decided to exercise his option to buy what is known as a "junior" mortgage.
This in turn will wrap around one or two other more important mortgages that you might already have on the go. While the property or the loan is under this "wrap" the seller can choose to take a note of promissory from the person who is buying, which is sort of a promise that the buyer will indeed pay the money that is due on the underlying mortgage as well as add a little to the pot.
Now the new person will start to make payments on a monthly basis to the person who has sold the property, in turn, this person who has sold the property has to make the payments to the mortgagee. Now if the new person who has just bought in can't make the payments for some reason, the person who has sold the home or land has the right to foreclose and take back the property.
Some will say that a wrap-around mortgage is considered to be a transaction where the lender will take responsibility for a mortgage that already exists. Others have this to say about it, they say that it will draw people to it like flies to honey because of the fact that the lender is able to get himself a much lower interest rate on a mortgage that already exists, in turn getting a higher profit for themselves in the end. Sound's pretty sneaky if you ask me.
Now here is a twist, there will be a time (not often, but it does happen) where the lender also happens to be the seller. In turn, the wrap-around would be considered a sort of seller-financing if you will. Another way to go would be to get a second mortgage, but come one it doesn't seem as exciting as the wrap-around right?
Think of it this way, the only loans that are wraparound are what is known as assumable loans. These loans are the ones where the borrowers can decide that they want to put their money into buying a house instead.
Here is another interesting bit of information that you probably did not know about this wrap-around mortgage. When the interest starts to rise and the capital is making more money, the interest in your wrapping assumable loans will also take a bump up.
This way, for the sellers, they can buy something at a low price and then when they can they will sell out for the highest price that they can grab. Remember though, playing the market like this is very, very risky.
A wrap-around mortgage loan is like setting a second financing option (like a second "help button") if you will. This is when the person who is selling decides to give the person who has decided to exercise his option to buy what is known as a "junior" mortgage.
This in turn will wrap around one or two other more important mortgages that you might already have on the go. While the property or the loan is under this "wrap" the seller can choose to take a note of promissory from the person who is buying, which is sort of a promise that the buyer will indeed pay the money that is due on the underlying mortgage as well as add a little to the pot.
Now the new person will start to make payments on a monthly basis to the person who has sold the property, in turn, this person who has sold the property has to make the payments to the mortgagee. Now if the new person who has just bought in can't make the payments for some reason, the person who has sold the home or land has the right to foreclose and take back the property.
Some will say that a wrap-around mortgage is considered to be a transaction where the lender will take responsibility for a mortgage that already exists. Others have this to say about it, they say that it will draw people to it like flies to honey because of the fact that the lender is able to get himself a much lower interest rate on a mortgage that already exists, in turn getting a higher profit for themselves in the end. Sound's pretty sneaky if you ask me.
Now here is a twist, there will be a time (not often, but it does happen) where the lender also happens to be the seller. In turn, the wrap-around would be considered a sort of seller-financing if you will. Another way to go would be to get a second mortgage, but come one it doesn't seem as exciting as the wrap-around right?
Think of it this way, the only loans that are wraparound are what is known as assumable loans. These loans are the ones where the borrowers can decide that they want to put their money into buying a house instead.
Here is another interesting bit of information that you probably did not know about this wrap-around mortgage. When the interest starts to rise and the capital is making more money, the interest in your wrapping assumable loans will also take a bump up.
This way, for the sellers, they can buy something at a low price and then when they can they will sell out for the highest price that they can grab. Remember though, playing the market like this is very, very risky.
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