Home Loans: Loan Flipping
A wrap-around mortgage is something that borrowers can consider when trying to get a loan. It works by giving the borrower an interest in first mortgage and then another came out. These two are combined into one with the lower interest rate.
Definition of Wrap-Around Mortgage
n simple terms, a wrap-around mortgage is one in which the lender assumes responsibility for an existing mortgage. An example of this is Brian, who has a mortgage of $ 70 000, but manages to sell his house to James for $ 100,000. James makes a payment of $ 5,000 and have to borrow $ 95 000. This essentially "wrap-around" of the old, because the new lender makes payments on the mortgage old.
Lenders love this kind of mortgage, as you can get a better deal for themselves. The oldest mortgage $ 70 000 may have an interest rate of 6%. The news was 8%. There is a difference of $ 25 000 between the two, winning 8% currently. They will also receive the difference between the two rates of the old mortgage. The difference is essentially a rate of $ 25,000 total interest of 13.5% at present can not charge borrowers, obviously, if achieved through this method instead.
The lender is usually the seller for profit. It is a way that the seller is financing a mortgage for the buyer. Another is a second mortgage. As in the previous example, James could get $ 70 000 from a bank, while obtaining the remaining $ 25 000 Brian, the seller. The wrap-around mortgage does not refund the original but not a second mortgage.
The loans can be packaged is assumable. This means that the loan can be transferred to persons who are eligible to purchase the house. The only two guys who can do without the lender is FHA and VA. Most fixed rate loans require mortgage loan payable in full if the house is sold. These terms and conditions that make it impossible for owners to have a second mortgage for the vendor, unless permitted by the lender, and it will be at current market rates.
Explain Wrap-Around Mortgages

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