A wraparound mortgage is a junior encumbrance that is ordinarily made when property will support additional financing, and the mortgagor does not want to prepay a favorable existing mortgage obligation but needs additional cash, or where the existing obligation precludes prepayment or contains an excessive prepayment penalty. In such an instrument, the wraparound beneficiary charges interest on the entire amount of the wraparound loan and agrees to make the principal and interest payments on the existing prior encumbrance as it collects principal and interest payments from the mortgagor.
An Alaska Wraparound Mortgage is a type of financing arrangement in which a buyer takes over the existing mortgage of a seller while simultaneously giving the seller a new mortgage. This allows the buyer to purchase a property without obtaining a new loan, assuming the seller's existing mortgage instead. The buyer then makes payments to the seller, who in turn uses a portion of those payments to continue paying off the original mortgage. This type of mortgage arrangement is popular in states like Alaska, where traditional financing may be difficult to obtain or where interest rates on existing mortgages are more favorable. The Alaska Wraparound Mortgage allows buyers to secure financing easily and sellers to transfer their mortgage and potentially sell their property more quickly. Here are some relevant keywords associated with the Alaska Wraparound Mortgage: 1. Real estate financing: The Wraparound Mortgage offers an alternative means of obtaining financing for real estate transactions. 2. Assumption of mortgage: The buyer assumes the seller's existing mortgage, avoiding the need for a new loan. 3. Simultaneous mortgage: The buyer provides a new mortgage to the seller alongside taking over the existing mortgage. 4. Interest rate advantage: The Wraparound Mortgage may be beneficial when interest rates on existing mortgages are lower than those available for new loans. 5. Seller financing: The seller becomes the lender, receiving mortgage payments directly from the buyer. 6. Acceleration clause: The original mortgage may contain an acceleration clause, allowing the lender to demand immediate payment if the property is sold. 7. Due-on-sale clause: This clause in the original mortgage allows the lender to require repayment if the property is transferred without their consent. 8. Contract for deed: Another type of Wraparound Mortgage where the buyer makes installment payments to the seller, who holds legal title to the property until the debt is fully paid. 9. Balloon payment: In some cases, the Wraparound Mortgage may include a balloon payment, requiring the buyer to make a large payment at a specified future date. 10. Loan servicing: The seller may still need to oversee the payments on the original mortgage and ensure timely payment to prevent foreclosure.
