Posted by Ed Garcia on March 23, 2001 at 09:55:45:
Kevin,
You could sell the house on what they call a “Wrap-around Mortgage”.
A Wrap-around Mortgage, is when the seller creates a new loan, encompassing their existing loan or financing, should they have a second mortgage as well as a first.
Example: The sale of a $100,000 property with a $20,000 cash down payment by the buyer and an assumable senior loan balance of $60,000, creating a $20,000 shortage, can be financed by the seller who would carry back a new wraparound loan for $80,000. This
wrap-around would require the borrower to make the payment on the $80,000 while the seller would retain the responsibility for making the required payment on the undisturbed existing $60,000 loan.
I’m currently reading the “Rich Dad Poor Dad” series, and in Roert’s second book “Cashflow Quadrant” around page 160 he talks about “Being the Bank”. He explains that you sell the house and collect the payments (principle and interest) from the buyer, how exactly is this done. My situation is I’m trying to sell my house at this moment and I just ran across this part of the book. I bought the house two years ago for $93k and put $12k down, the house is on the market for $108k. Could this be a good opportunity to sell it to someone with an IOU? I don’t know all of the laws surrounding selling with an IOU, maybe this could also be explained to me a little bit better. Any information would be greatly appreciated.