How to Refi and Wrap Mortgage???

Question

I need to figure out how to do a cash out refi on a property with a wrap mortgage. A wholesaler brought me a really good deal. I can just take over the payments and do some repairs and I will have tons of equity. I plan to hold this as a long-term rental. The problem is that the mortgage is at almost 8%!! I don't want to keep that mortgage. I really like that I can basically get into this property with nothing down but the wholesaler's fee. My plan is the BRRR this property.

What are your thoughts??

Charity Skore · Answer

@Timothy Borg

If you are going to do a refi you will need the prior seller to provide an authorization to order payoff for most lenders, or at lease provide a social security number, depending on lender. Message me for details and I can walk you and or your lender through it.

Account Closed · Answer

When you do a Wrap it implies that title is now in your name even though there is an outstanding mortgage in someone else's name. You can only refinance what is in your name. That means yes, you can refinance but the lender would require the underlying loan to be paid off.

To get a lower interest rate while maintaining the Wrap you would have to somehow talk the seller into doing a refinance, (but he can't since your name is on the title) and the seller has no incentive to refinance anyway.

Strategy would be to buy the property using the Wrap and then turn around and refi when the seasoning allows for it.

Rick Pozos · Answer

It kinda depends on the length of the loan. Does it have 10 years left? 20 years? I would figure out what the difference is between the payments at 8% and 5% or 6% or whatever rate you can get by refinancing. Remember it will cost you at least several thousand $$ to refinance. It will cost you nothing to leave the loan in place. So what I am saying is that you can pay $50 more per month or $600 per year for 10 years or $6000 or you can pay the refinance cost all up front.

Personally, I would rather leave the loan in place because I would rather pay just a little extra every month instead of 5k or 6k up front. Remember time value of money.

How to Refi and Wrap Mortgage???

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