WrapAround - Posted by Rich

Real Estate Investing
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Posted by Rich on March 09, 2001 at 19:38:52:

Thanks for the advice…I really appreciate it.

Take care!!!

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WrapAround - Posted by Rich

Posted by Rich on March 08, 2001 at 19:47:15:

If I offer a wraparound mortgage to purchase a property that has an assumable mortgage, will I have to structure the monthly payments so that I meet the seller’s current P.I.T.I. monthly payments…even though I will take title and will be responsible for paying the taxes and insurance?

…or will I only have to consider the P.I. part of his monthly payments?

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Re: WrapAround - Posted by Monique

Posted by Monique on March 09, 2001 at 06:13:08:

Rich,

Avoid assuming this loan and having it in your name with an institutional lender. Buy the property Subject To this 1st loan, and give the seller a 2nd loan for their equity.

This is better than doing a wraparound – since you can control the payments on the 1st mortgage. And, if the 1st mortgage has been in place for a while, you could get the equity paydown. If you buy on a wrap, the seller gets the equity paydown (assuming that there is any to speak of).

Now, if you absolutely must buy this property with a wrap … If the seller’s mortgage has taxes and insurance escrowed, your payment to the Seller will likely include taxes and insurance. (It doesn’t have to be that way. Your Seller will likely require it though.) If the seller’s mortgage does not have an escrow account, then you could negotiate with your seller to NOT have an escrow payment in your wraparound mortgage, and simply pay these amounts when they come due.

Monique

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Re: WrapAround - Posted by Jim

Posted by Jim on March 08, 2001 at 19:52:46:

If it’s assumable then “Assume” it! (Through your trust of course)

Then just give the seller a 2nd back for the equity on terms you both agree to.

Hope this helps

Jim

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Re: WrapAround - Posted by Rich

Posted by Rich on March 09, 2001 at 15:09:34:

How does this work?
I am not familiar with obtaining the property “subject to” the existing 1st mortgage.
I was under the impression that “subject to” within a contract dealt with situations such as:

“subject to” a satisfactory building
inspection.

---- or ----
“subject to” obtaining financing.

Would you please set me straight on this???

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Re: WrapAround - Posted by Rich

Posted by Rich on March 09, 2001 at 15:13:05:

One reason why I am not willing to assume the existing mortgage is that it is “VA…assumable with qualify”.

I currently have a VA on my primary residence at this time.

I am sure that I will be unable to assume the existing mortgage as a result of this reason.

Please feel free to correct me if I am under the wrong impression here.

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Another use of “subject to” - Posted by Monique

Posted by Monique on March 09, 2001 at 19:22:49:

Rich,

You are correct in your interpretation of the use of “subject to” pertaining to events.

When buying “subject to” an existing mortgage, you are buying with recognition that there is a loan in place on the property and you will begin making payments on it.

Here’s how it works …
You agree to purchase the property by TAKING OVER the payments on the seller’s loan. You are not going to go to the VA office to assume the loan or have it placed in your name. The loan will REMAIN IN THE SELLER’S name. You will just start sending in the checks to the lender each and every month. You get the title to the property, but not the loan in your name.

This is the world of creative finance that many on this board live in. No banks, no qualifying for mortgages, no loan origination points, no assumption fees, and no mortgages in YOUR name.

More detail on how to do a deal like this can be found in some excellent courses right here at this site. Bronchick’s “Cash Cow” course or LeGrand’s “FSBO Cash Flow” being two of them.

Monique

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Re: WrapAround - Posted by Jim

Posted by Jim on March 09, 2001 at 18:06:45:

Take it … “Subject To” and then give him a 2nd for his equity that makes sense. Or just do like you mentioned with a Wrap.

Best of Luck

Jim

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Re: Another use of “subject to” - Posted by Rich

Posted by Rich on March 09, 2001 at 19:41:23:

Thanks, Monique.
This sounds too good to be true…but I am going to try it.

Thanks for the responses…you’ve been a lot of help.