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 Houston Texas All-Inclusive Trust Deed (AID), also known as a Wrap-Around Deed of Trust, is a legal document that combines multiple mortgages into a single trust deed, allowing for simplified and streamlined financing for real estate properties. This type of deed is primarily used in the Houston, Texas area. An AID is generally utilized when a property owner wants to sell their property and offers seller financing to the buyer. This type of trust deed wraps around the existing mortgage and includes it in the new financing package. By doing so, the buyer receives financing from the seller, while the seller's existing mortgage is retained and remains in place. This arrangement offers several advantages for both parties involved. For the buyer, an AID provides an opportunity to purchase a property without having to obtain traditional financing from a bank or mortgage lender. This can be especially beneficial for individuals who may not qualify for a traditional mortgage due to credit or other financial limitations. On the other hand, as the seller, using an AID allows for greater control over the financing and terms of the sale. Sellers may be able to negotiate higher interest rates, flexible payment schedules, or even balloon payments, which can potentially result in higher overall profits compared to an outright sale. There are a few different types of Houston Texas All-Inclusive Trust Deed — Wrap-Around Deed of Trust: 1. Standard AID: This is the most common type of AID, where the existing mortgage is wrapped around and included in the new financing package. The seller acts as the lender, collecting payments from the buyer and using some funds to pay the original mortgage. 2. Junior AID: In this variation, a new mortgage is created and junior to the existing mortgage. The seller retains the existing mortgage, and the buyer makes payments to both the seller and the original lender. 3. Standby AID: This type of AID is often used when the seller does not want to foreclose on the property, but instead prefers to maintain control over the financing. The seller retains the existing mortgage, and the buyer makes payments to the seller. Overall, the Houston Texas All-Inclusive Trust Deed — Wrap-Around Deed of Trust provides a flexible and creative financing option for real estate transactions in the Houston area. It allows sellers to offer financing to buyers while still retaining their existing mortgage, and it enables buyers to acquire properties without the need for traditional bank financing.
