Posted by XXX on August 24, 2003 at 17:16:01:
sIMPLY GO TO an escrow company or closing attny or who ever handles real estate transaction in your part of the country and tell them what you and the seller are agreeing to and they will take care of creating all the documents.
Question re: wraparounds… - Posted by Mike in CA
Posted by Mike in CA on August 24, 2003 at 14:54:56:
Bill Bronchick posted an article about wraparounds and taking advatage of low rates and rising property values…I wish to proceed on a wraparound as a close friend of mine has great credit, and we wish to go in together on some of these deals…My question is where would one get the contracts to square away deals like this?..Is a wraparound the same thing as an installment land contract (as Bronchick mentioned in the article)?..THANKS AHEAD OF TIME FOR ANY HELP!
Not the same. - Posted by Brent_IL
Posted by Brent_IL on August 24, 2003 at 19:18:26:
An installment land contract is the same as a contract for deed, i.e., the seller holds title until you make the agreed upon payments. A wraparound is a junior mortgage that encompasses all underlying liens.
I’m not saying that XXX’s answer is wrong, but it isn’t that easy. For an attorney or title company to draw up the supporting documents, they need to start with a purchase agreement between the parties. The purchase agreement has to address the wraparound.
The benefit of a wrap to the seller is that he receives interest on the purchase money mortgage that he extends to you, and he also receives interest on the non-equity part that represents the accumulated balances of the liens. This part doesn?t belong to him because it would have to be paid to the bank if he sold for cash, but he earns money on it anyway.