How to Assume a Wrap-Around Mortgage
- 1). Research the wrap-around mortgage loan you want to assume, including loan payments, the loan balance, the due date of the loan, the interest rate and who holds the loan. Usually, a wrap-around mortgage is the only type of loan that is assumable except for those made by the Federal Housing Administration or the Veteran's Administration.
- 2). Consult an escrow company about creating the wrap-around document for you, with the terms agreed upon by both the seller and the buyer. An experienced real estate broker and the lender can help you define these terms.
- 3). Obtain consent from all parties, including the lenders, to assume the mortgage. If one of the mortgage companies does not agree, they can call the loan in full and, if not paid, foreclose on the home.
- 4). Make your payments to the seller, usually the mortgage company or homeowner, who then makes payments to the original mortgage holder.
- 5). Open a bank account in both the buyer's and seller's names if there is concern that the seller will pocket the money paid and not pay off the original mortgage.
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