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 West Virginia wraparound mortgage is a type of financing arrangement that allows a homeowner to sell their property while keeping their existing mortgage in place. It is also commonly referred to as an "all-inclusive trust deed" or "wrap loan". This real estate transaction involves the buyer assuming the seller's mortgage as part of the purchase price, and the seller effectively acting as the lender. Key Features of a West Virginia Wraparound Mortgage: 1. Seller Financing: The seller becomes the lender and provides financing to the buyer by creating a new mortgage that "wraps around" the existing mortgage on the property. 2. Single Payment: The buyer makes a single monthly payment to the seller, who in turn continues to make mortgage payments on the original loan. 3. Additional Money: The buyer may also be required to make an additional payment to the seller to cover the difference between the existing mortgage and the agreed-upon purchase price. 4. Interest Rate: The interest rate on the wraparound mortgage may be set by the seller, and it can differ from the interest rate on the original mortgage. 5. Due-on-Sale Clause: The original mortgage may have a due-on-sale clause, meaning that the lender has the right to accelerate the loan and demand full payment if the property is sold. However, with a West Virginia wraparound mortgage, the seller assumes the risk of a potential acceleration clause. Types of West Virginia Wraparound Mortgages: 1. Fully Assumable Wraparound Mortgage: This type of wraparound mortgage allows the buyer to assume the existing mortgage on the property without needing to qualify for a new loan. The buyer takes on all the terms and conditions of the original mortgage and makes payments directly to the seller. 2. Junior Wraparound Mortgage: In this scenario, the seller retains the original financing in place while simultaneously creating a second mortgage for the buyer. The buyer makes a single payment to the seller, who then distributes the appropriate sum to both the original lender and the seller's new mortgage. 3. Partial Wraparound Mortgage: A partial wraparound mortgage occurs when the amount of the existing mortgage balance is higher than the agreed-upon purchase price. In this case, the buyer makes payments on the wraparound mortgage, covering the difference between the purchase price and the original mortgage balance. In conclusion, a West Virginia wraparound mortgage is an alternative financing option that allows homeowners to sell their property without paying off their existing mortgage. This arrangement can be beneficial for both the buyer and the seller, providing flexible terms and potentially enabling buyers who may not qualify for traditional financing to purchase a property.A West Virginia wraparound mortgage is a type of financing arrangement that allows a homeowner to sell their property while keeping their existing mortgage in place. It is also commonly referred to as an "all-inclusive trust deed" or "wrap loan". This real estate transaction involves the buyer assuming the seller's mortgage as part of the purchase price, and the seller effectively acting as the lender. Key Features of a West Virginia Wraparound Mortgage: 1. Seller Financing: The seller becomes the lender and provides financing to the buyer by creating a new mortgage that "wraps around" the existing mortgage on the property. 2. Single Payment: The buyer makes a single monthly payment to the seller, who in turn continues to make mortgage payments on the original loan. 3. Additional Money: The buyer may also be required to make an additional payment to the seller to cover the difference between the existing mortgage and the agreed-upon purchase price. 4. Interest Rate: The interest rate on the wraparound mortgage may be set by the seller, and it can differ from the interest rate on the original mortgage. 5. Due-on-Sale Clause: The original mortgage may have a due-on-sale clause, meaning that the lender has the right to accelerate the loan and demand full payment if the property is sold. However, with a West Virginia wraparound mortgage, the seller assumes the risk of a potential acceleration clause. Types of West Virginia Wraparound Mortgages: 1. Fully Assumable Wraparound Mortgage: This type of wraparound mortgage allows the buyer to assume the existing mortgage on the property without needing to qualify for a new loan. The buyer takes on all the terms and conditions of the original mortgage and makes payments directly to the seller. 2. Junior Wraparound Mortgage: In this scenario, the seller retains the original financing in place while simultaneously creating a second mortgage for the buyer. The buyer makes a single payment to the seller, who then distributes the appropriate sum to both the original lender and the seller's new mortgage. 3. Partial Wraparound Mortgage: A partial wraparound mortgage occurs when the amount of the existing mortgage balance is higher than the agreed-upon purchase price. In this case, the buyer makes payments on the wraparound mortgage, covering the difference between the purchase price and the original mortgage balance. In conclusion, a West Virginia wraparound mortgage is an alternative financing option that allows homeowners to sell their property without paying off their existing mortgage. This arrangement can be beneficial for both the buyer and the seller, providing flexible terms and potentially enabling buyers who may not qualify for traditional financing to purchase a property.
