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.
Oklahoma Wraparound Mortgage: A Comprehensive Guide for Homebuyers Are you considering purchasing a property in Oklahoma? If so, you may come across the term "Oklahoma Wraparound Mortgage." In this detailed description, we'll provide you with an in-depth understanding of this mortgage type, its benefits, and the different variations you may encounter in Oklahoma. What is an Oklahoma Wraparound Mortgage? A wraparound mortgage, also known as an all-inclusive mortgage or an overriding mortgage, is a unique financing option that allows a homebuyer to assume the seller's existing mortgage while securing additional financing to cover the remaining balance on the property. In Oklahoma, a wraparound mortgage is commonly used in instances where the buyer doesn't qualify for traditional financing or aims to simplify the purchasing process. Types of Oklahoma Wraparound Mortgages: 1. Junior Wraparound Mortgage: This type of wraparound mortgage involves the buyer obtaining a second, subordinate mortgage, which wraps around the existing loan held by the seller. The buyer then makes a single monthly payment to the seller, who, in turn, continues making the payments on the original mortgage. 2. Senior Wraparound Mortgage: In this scenario, the seller's existing mortgage has a lower interest rate than the prevailing market rate. The buyer assumes the existing mortgage and secures a new mortgage for the difference between the assumed mortgage balance and the purchase price. The buyer then makes a single monthly payment to the new lender, including payments for both the existing and new mortgage amounts. 3. Blanket Wraparound Mortgage: A blanket wraparound mortgage combines multiple properties or parcels of land under a single loan. This type of mortgage can be useful for real estate investors or developers who wish to consolidate multiple loans into one, simplifying their payment obligations and potentially reducing interest rates. Benefits of Oklahoma Wraparound Mortgages: — Accessibility: Wraparound mortgages provide an alternative financing option for homebuyers who struggle to obtain traditional loans due to credit issues or lack of a down payment. — Simplicity: By assuming the seller's existing mortgage, buyers can bypass the rigorous application process, potentially saving time and effort. — Flexible Terms: Oklahoma wraparound mortgages may offer more flexibility in terms of interest rates, repayment periods, and loan assumptions, as they are negotiated directly between the buyer and the seller. Legal Considerations: Before entering into an Oklahoma wraparound mortgage, it's crucial to consult legal professionals and ensure compliance with state laws and regulations. Seek guidance regarding due-on-sale clauses, disclosure requirements, licensing, and potential risks associated with this type of financing. In conclusion, an Oklahoma Wraparound Mortgage is a versatile financing option that allows homebuyers to assume the seller's existing mortgage while obtaining additional funds for the remaining balance. By understanding the various types of wraparound mortgages available in Oklahoma and consulting legal professionals, buyers can make informed decisions and potentially overcome traditional financing barriers.
