Wrap-around Mortgage – A wrap-around mortgage is also referred to as an “Owner Carry,” a Trust Deed, or a Land Contract. In a wrap-around mortgage, a buyer and seller have agreed to a purchase price first, and the terms are negotiated after the sale of the property. A wrap-around mortgage is when the seller still has a loan on the property and the new buyer usually will pay for the existing monthly payment in addition to the agreed upon price. The biggest concern in wrap-around mortgages is that a seller could be collecting payments from the buyer and not sending the bank their cut for the original mortgage, so now the seller is collecting money on a home that can go into foreclosure after a few months to a year, and the buyer could go without knowing that the home they are paying on, and planning to own one day, is about to be taken from them.

Mortgage Assumption – A mortgage assumption is similar to a wrap-around mortgage, but is safer for the buyer, since the initial lender is involved in one way or another. Usually there are two kinds of mortgage assumptions; a qualifying and non-qualifying loan assumption. A qualifying mortgage assumption requires the buyer to go through the entire loan application and qualification process before buying any homes for sale in Denver CO. This mean the buyer will need to submit their credit, job history and income information to determine whether they can or cannot make the mortgage payments. If the buyer qualifies, usually the lender will allow him to keep the terms that the seller currently has on the property. A non-qualifying mortgage assumption is just the opposite; the buyer simply takes over the existing mortgage without any proof of income, credit check or job history.

Equity Only Financing – This is when a seller finances the equity in a property. The buyer is responsible for acquiring new financing to pay off all of the seller’s encumbrances and liens. The buyer would then have to secure their own financing equal to, or greater than, the owner’s underlying mortgage. Often times this is a last resort, since many buyers are interested in owner financing mostly for issues of qualifying for a conventional loan due to a possible bankruptcy. Qualifying for an additional loan also makes things more complicated and makes a buyer feel like they are doubly indebted on a property.

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