Posted by Liz(CA) on February 07, 2001 at 24:53:14:
Paul,
Offer your price with a % of interest & term legnth.
Example-$100,000 @ 8% interests for 30 years giving you a monthly payment to the seller of 733.77. This new financing “wraps around” the existing financing creating a higher monthly payment to the seller who still has to pay on the underlying first mortgage. This is where the escrow company comes in to make sure the first payment is being paid. You pay them the $733.77 and they pay the first mortgage payment & send the balance to the seller. Their fees are usually based on the sales price (the higher it is the more money they charge) and they vary a lot from state to state so call a few tomorrow and ask exactly what they charge. Hope this helps!
Liz
Can I do a Wraparound Mortgage in CA? - Posted by Paul (CA)
Posted by Paul (CA) on February 06, 2001 at 19:28:39:
This may seem like a dumb question, but how exactly do I do a wraparound mortgage?
The details:
we’re in Northern California
2 yr old first mortgage is non-assumable
owner will leave it intact (I think) for a period of time
owner will take a second for equity
I would like to do a wrap- how does it work? Who creates the paperwork, the Title company? Any idea on cost of escrow process? Do I just go to the title company and they’ll know what to do? Help.
Yes, it’s called an "AITD* - Posted by Bill Gatten
Posted by Bill Gatten on February 08, 2001 at 01:08:03:
*All Inclusive Trust Deed.
Not to try to improvie on Liz’ answer: but coming at it from another angle:
If you’re intrepid enough to do it yourself, go to the local Board of Realtors (or Nolo.com) and pick up forms for an AITD and the accompanying promissory note and grant deed (and Preliminary Change of Ownership Report).
On you first one, you may need some help…but the docs are pretty self explanatory if you have a model to follow. But, yes, the title company can do it for you…for a fee (and that’s always the best way).
Here’s an example…
Purchase price is $100K
There is a 1st Trust Deed for $60K - payment is $600 per month
There is a 2nd Trust Deed for $20K - pqayment is $200 per month
And the Sellerr is willing to carry $20K for $200 per month
A promissory note is written for $100K (at X%i X years)), secured by an All Inclusive Trust Deed on the same property that secures the other two notes. Payments are set at $1,000 per month. When your $1,000 is received each month by the seller, he pays the 1st ($600) and the 2nd ($200) and has $200 left over for himself. If you default he merely foreclosoes on the $100K note and takes the house back.