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 Virginia Wraparound Mortgage, also known as an All-Inclusive Deed of Trust or Wrap Loan, is a type of mortgage that allows a buyer to purchase a property without securing a new mortgage loan. Instead, a wraparound mortgage combines the existing mortgage on the property being sold with a new mortgage issued by the seller. By utilizing a wraparound mortgage, the buyer assumes the seller's existing mortgage, taking over the payments on that loan, while also obtaining a new mortgage from the seller for the additional amount owed on the property. This new mortgage "wraps" around the original loan, hence the name. This type of mortgage is usually used in situations where a buyer is unable to secure traditional financing or wants to take advantage of the existing favorable terms on the seller's mortgage. It provides an alternative to conventional financing methods and can be an attractive option for buyers and sellers in certain situations. There are two main types of Virginia Wraparound Mortgages: 1. Junior Wraparound Mortgage: In this type, the seller keeps the existing mortgage in place and the buyer obtains a new mortgage from the seller for the difference between the purchase price and the balance owed on the original loan. The buyer makes payments to the seller, who in turn continues to make payments on the original mortgage. 2. Senior Wraparound Mortgage: Here, the seller pays off the existing mortgage and replaces it with a new one that is higher in amount. The buyer makes payments to the seller, who uses a portion of those payments to pay the new mortgage. This type may be beneficial when the seller wants to increase the interest rate or adjust other terms. It is important to note that wraparound mortgages should be entered into with caution and thorough understanding of the terms and legal implications involved. Both parties should seek legal advice before proceeding to ensure compliance with Virginia laws and protect their rights and interests. In summary, a Virginia Wraparound Mortgage is a unique financing option that allows a buyer and seller to work together to facilitate a property sale without obtaining a new mortgage loan. Whether it is a junior or senior wraparound mortgage, this arrangement provides flexibility and alternative financing options based on the specific needs of the parties involved.A Virginia Wraparound Mortgage, also known as an All-Inclusive Deed of Trust or Wrap Loan, is a type of mortgage that allows a buyer to purchase a property without securing a new mortgage loan. Instead, a wraparound mortgage combines the existing mortgage on the property being sold with a new mortgage issued by the seller. By utilizing a wraparound mortgage, the buyer assumes the seller's existing mortgage, taking over the payments on that loan, while also obtaining a new mortgage from the seller for the additional amount owed on the property. This new mortgage "wraps" around the original loan, hence the name. This type of mortgage is usually used in situations where a buyer is unable to secure traditional financing or wants to take advantage of the existing favorable terms on the seller's mortgage. It provides an alternative to conventional financing methods and can be an attractive option for buyers and sellers in certain situations. There are two main types of Virginia Wraparound Mortgages: 1. Junior Wraparound Mortgage: In this type, the seller keeps the existing mortgage in place and the buyer obtains a new mortgage from the seller for the difference between the purchase price and the balance owed on the original loan. The buyer makes payments to the seller, who in turn continues to make payments on the original mortgage. 2. Senior Wraparound Mortgage: Here, the seller pays off the existing mortgage and replaces it with a new one that is higher in amount. The buyer makes payments to the seller, who uses a portion of those payments to pay the new mortgage. This type may be beneficial when the seller wants to increase the interest rate or adjust other terms. It is important to note that wraparound mortgages should be entered into with caution and thorough understanding of the terms and legal implications involved. Both parties should seek legal advice before proceeding to ensure compliance with Virginia laws and protect their rights and interests. In summary, a Virginia Wraparound Mortgage is a unique financing option that allows a buyer and seller to work together to facilitate a property sale without obtaining a new mortgage loan. Whether it is a junior or senior wraparound mortgage, this arrangement provides flexibility and alternative financing options based on the specific needs of the parties involved.
