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When the buyer either sells or refinances the property, all mortgages are paid off in full, with the seller entitled to the difference in the payoff of the wrap and any underlying loan payoffs. Typically, the seller also charges a spread. For example, a seller may have a mortgage at 6% and sell the property at a rate of 8% on a wraparound mortgage.
A new mortgage could come with new terms — especially if it’s with a different lender — that can affect how you set aside cash from your budget for property taxes, says CPA Lisa Greene-Lewis ...
The seller could choose which security documents (mortgage, deed of trust, land sales document, etc.) to best secure his/her interest until the loan is paid. If the property sells for a substantial profit, the seller can spread the resulting capital gain over multiple years, usually reducing the overall tax burden by turning the transaction ...
A due-on-sale clause is a clause in a loan or promissory note that stipulates that the full balance of the loan may be called due (repaid in full) upon sale or transfer of ownership of the property used to secure the note. The lender has the right, but not the obligation, to call the note due in such a circumstance.
Typical closing costs for sellers can include transfer taxes and escrow fees. If there is an existing mortgage on the house, that will have to be paid off as well.
An acceleration clause is a section of a mortgage contract that can have big consequences: Namely, it can require you to pay off your entire mortgage at once. Even if you miss only one payment.
Taxing jurisdictions levy tax on property following a preliminary or final determination of value. Property taxes in the United States generally are due only if the taxing jurisdiction has levied or billed the tax. The form of levy or billing varies, but is often accomplished by mailing a tax bill to the property owner or mortgage company. [48]
One of the things you will notice is a number of fees and taxes you have The language of real estate can be scary, but not if you do some research. Mortgage Tax: What It Is and How to Avoid It