A wraparound deed of trust is a junior encumbrance that is ordinarily made when property will support additional financing, and the trustor does not want to prepay a favorable existing trust deed 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 trustor.
The Bexar Texas All Inclusive Trust Deed, also known as a Wrap-Around Deed of Trust, is a financial arrangement commonly used in real estate transactions. This type of deed serves as a comprehensive and inclusive form of securing a loan, while also allowing for the transfer of ownership from the original seller to the buyer. In a Wrap-Around Deed of Trust, the buyer assumes the existing mortgage of the property being purchased, while simultaneously creating a new mortgage to cover the remaining balance. This means that the buyer makes a single payment each month, which includes the payments for both the original mortgage and the new mortgage. The original mortgagee (seller) acts as the lender and receives payments from the buyer or new mortgagee. This arrangement offers several advantages for both the seller and the buyer. For the buyer, it enables them to purchase the property without having to secure a new mortgage, potentially saving on closing costs and the need for a down payment. It also allows buyers with less-than-perfect credit to acquire a property. For the seller, a Wrap-Around Deed of Trust can provide a steady source of income, especially if the seller's existing mortgage has a lower interest rate than what can currently be obtained. The seller may also be able to avoid paying prepayment penalties and other fees associated with refinancing the mortgage. It is worth noting that there are some variations of the Bexar Texas All Inclusive Trust Deed — Wrap-Around Deed of Trust, each with specific terms and conditions. These can include: 1. Junior Wrap-Around Deed of Trust: In this scenario, the seller creates a new mortgage that wraps around an existing first mortgage held by a primary lender. The buyer makes payments to the seller, who in turn uses a portion of those payments to satisfy the first mortgage. 2. Senior Wrap-Around Deed of Trust: In this case, the seller carries a second mortgage that wraps around the existing first mortgage. The buyer makes payments to the seller, who distributes the necessary portion to the first mortgagee. 3. Balloon Payment Wrap-Around Deed of Trust: With this type of deed, the buyer makes regular payments to the seller for a specified period. At the end of that term, a balloon payment becomes due to satisfy the seller's original mortgage. Overall, the Bexar Texas All Inclusive Trust Deed — Wrap-Around Deed of Trust is a flexible financing option that benefits both buyers and sellers. However, it is essential for all parties involved to thoroughly understand the terms and conditions, as well as consult legal and financial professionals to ensure compliance with local laws and regulations.
