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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.
In layman's terms, this is when the seller in a transaction offers the buyer a loan rather than the buyer obtaining one from a bank. To a seller, this is an investment in which the return is guaranteed only by the buyer's credit-worthiness or ability and motivation to pay the mortgage. For a buyer it is often beneficial, because he/she may not ...
Read on for more need-to-know terms when selling a home. ... "As-is": A contract or listing clause stating that the seller will not repair or correct any problems with the property.
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.
A clause in a purchase agreement that gives buyers and sellers the right to cancel a contract if certain terms aren't met. For example, a mortgage contingency requires the buyer to secure a ...
A mortgage is a legal instrument of the common law which is used to create a security interest in real property held by a lender as a security for a debt, usually a mortgage loan. Hypothec is the corresponding term in civil law jurisdictions, albeit with a wider sense, as it also covers non-possessory lien.
If the mortgage is assumed without the lender’s consent, the seller would remain liable for any default on the part of the buyer. In cases of a VA Loan, a release of liability may be obtained after the assumption even if the lender’s approval was not given prior to the completion of the assumption process.
Many mortgage lenders require borrowers to have a homeowners insurance policy with a mortgagee clause. The mortgagee clause is a provision that protects the lender from financial loss if the ...