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Posts Tagged ‘Wrapping’

I have been spending a lot of time reading blogs about owner financing of real estate transactions, and there seems to be myth out there that you can not do owner financing if the property is not free and clear. I’m here to bust that myth. One common way to sell a property with an existing mortgage is the process of “wrapping” the mortgage. That is, the seller carries a note that is at least as large as the mortgage, and then uses the proceeds of the incoming payments to make his mortgage payment. For example, let’s suppose the price of the house is $100,000, and the existing mortgage is $60,000. The payments on this mortgage are $500 per month. Billy Buyer tells Sam Seller that he only has $20,000 to put down. In addition, Billy has some bruised credit and my have a hard time qualifying for a regular mortgage. Sam is retiring and moving to a smaller place. If he received $20,000 from the transaction he would be OK. Sam says to Billy, “Pay me the $20,000 down payment, and Read More