Wrap around mortgages

7 Replies

Who pays the insurance and property taxes on a wrap around mortgage? As of now, my taxes and insurance is not financed into my loan. If I owner finance and do a wrap around mortgage who's responsible for the taxes and insurance? 

The Owner.....which would be your buyer. 

Originally posted by @Jason Hirko :

@Belinda R. Your buyer is responsible for the cost, but you are still responsible for making sure they get paid. 

 Ok thanks. If I drop my current insurance, and the house is destroyed for some reason, who collects the insurance? Could I be added to her insurance somehow? Technically, I would still have my mortgage company to pay off. Just trying to make sure I understand completely. thanks!

Originally posted by @Jason Hirko :

@Belinda R. You would be a mortgage/lien holder on their policy, as would your underlying mortgage. They would get paid out first though

 Oh ok. Thank you for the help! Very much appreciated..I have one more question, can I refinance after the wrap around mortgage is in place? 

@Belinda R. Not if you record your lien on the property, as most lenders won't lend when there is a second lien on the property, and not if ownership has transferred to the new buyer, since the property isn't in your name anymore. You should make sure you are well versed in your loan documents and know what you are getting yourself into. More likely than not, you'll be putting yourself in technical default by going through with this.

Originally posted by @Jason Hirko :

@Belinda R. Not if you record your lien on the property, as most lenders won't lend when there is a second lien on the property, and not if ownership has transferred to the new buyer, since the property isn't in your name anymore. You should make sure you are well versed in your loan documents and know what you are getting yourself into. More likely than not, you'll be putting yourself in technical default by going through with this.

 Ok Thanks! I believe you have saved me a from a terrible mistake I was about to make. The balance of my loan is due in full by July 2018. I had planned on doing a wrap around mortgage and then refinancing prior to end my loan term.  I think I'll have to go the lease/purchase route. Thanks a ton for  your help :)

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