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.
A New York Wraparound Mortgage is a type of mortgage option that consolidates multiple existing mortgages into a single, new mortgage loan. It is also known as an "All-Inclusive Trust Deed" or "All-Inclusive Mortgage." The concept behind a New York Wraparound Mortgage is that it wraps around an existing mortgage, meaning that the new mortgage includes the outstanding balance of the original mortgage, along with any additional loan funds required. This allows the borrower to have only one mortgage payment to make each month instead of separate payments for multiple mortgages. One key advantage of a New York Wraparound Mortgage is that it enables the borrower to keep the existing mortgage terms while securing additional financing. This is particularly useful when the borrower wants to avoid triggering the due-on-sale clause in the original mortgage, which often requires full repayment of the loan upon transfer of the property. In New York, there are various types of Wraparound Mortgages available to borrowers, depending on their specific needs and situations. These include: 1. Balloon Wraparound Mortgage: This type of wraparound mortgage has a fixed interest rate for a specific period (usually 5 to 7 years), followed by a lump sum payment (or balloon payment) at the end. Borrowers who plan to sell the property before the balloon payment falls due often opt for this type of wraparound mortgage. 2. Adjustable Rate Wraparound Mortgage: With an adjustable rate wraparound mortgage, the interest rate fluctuates based on market conditions. This type of mortgage offers a lower initial interest rate, but it can rise or fall over time, potentially impacting the borrower's monthly payment amount. 3. Interest-Only Wraparound Mortgage: In an interest-only wraparound mortgage, the borrower only pays the interest on the loan for a predetermined period (usually between 5 and 10 years). At the end of the interest-only period, the borrower begins paying both principal and interest. This option provides short-term payment relief for borrowers. 4. Subordination Wraparound Mortgage: In certain cases, a subordination wraparound mortgage may be used to keep the existing financing in place while additional financing is obtained. In this scenario, the original mortgage remains the primary lien, while the new mortgage becomes subordinate. When considering a New York Wraparound Mortgage, it is crucial for borrowers to thoroughly understand the terms, conditions, and potential ramifications. Consulting with a qualified real estate attorney or mortgage professional is advisable to ensure compliance with New York state laws and to find the most suitable wraparound mortgage option. By opting for a New York Wraparound Mortgage, borrowers can streamline their mortgage payments, access additional funds, and potentially avoid triggering the due-on-sale clause when transferring property ownership, making it a valuable financial tool for homeowners in New York.A New York Wraparound Mortgage is a type of mortgage option that consolidates multiple existing mortgages into a single, new mortgage loan. It is also known as an "All-Inclusive Trust Deed" or "All-Inclusive Mortgage." The concept behind a New York Wraparound Mortgage is that it wraps around an existing mortgage, meaning that the new mortgage includes the outstanding balance of the original mortgage, along with any additional loan funds required. This allows the borrower to have only one mortgage payment to make each month instead of separate payments for multiple mortgages. One key advantage of a New York Wraparound Mortgage is that it enables the borrower to keep the existing mortgage terms while securing additional financing. This is particularly useful when the borrower wants to avoid triggering the due-on-sale clause in the original mortgage, which often requires full repayment of the loan upon transfer of the property. In New York, there are various types of Wraparound Mortgages available to borrowers, depending on their specific needs and situations. These include: 1. Balloon Wraparound Mortgage: This type of wraparound mortgage has a fixed interest rate for a specific period (usually 5 to 7 years), followed by a lump sum payment (or balloon payment) at the end. Borrowers who plan to sell the property before the balloon payment falls due often opt for this type of wraparound mortgage. 2. Adjustable Rate Wraparound Mortgage: With an adjustable rate wraparound mortgage, the interest rate fluctuates based on market conditions. This type of mortgage offers a lower initial interest rate, but it can rise or fall over time, potentially impacting the borrower's monthly payment amount. 3. Interest-Only Wraparound Mortgage: In an interest-only wraparound mortgage, the borrower only pays the interest on the loan for a predetermined period (usually between 5 and 10 years). At the end of the interest-only period, the borrower begins paying both principal and interest. This option provides short-term payment relief for borrowers. 4. Subordination Wraparound Mortgage: In certain cases, a subordination wraparound mortgage may be used to keep the existing financing in place while additional financing is obtained. In this scenario, the original mortgage remains the primary lien, while the new mortgage becomes subordinate. When considering a New York Wraparound Mortgage, it is crucial for borrowers to thoroughly understand the terms, conditions, and potential ramifications. Consulting with a qualified real estate attorney or mortgage professional is advisable to ensure compliance with New York state laws and to find the most suitable wraparound mortgage option. By opting for a New York Wraparound Mortgage, borrowers can streamline their mortgage payments, access additional funds, and potentially avoid triggering the due-on-sale clause when transferring property ownership, making it a valuable financial tool for homeowners in New York.
