Texas Wrap around Form

What is the Texas Wrap Around

The Texas Wrap Around is a legal document used primarily in real estate transactions. It allows a buyer to assume the existing financing on a property while simultaneously wrapping their new mortgage around the existing loan. This arrangement can be beneficial for buyers looking to purchase property without needing to secure new financing under potentially unfavorable terms. The Texas Wrap Around is particularly useful in situations where interest rates are rising, as it can provide a way to lock in lower rates from existing loans.

How to use the Texas Wrap Around

Using the Texas Wrap Around involves several key steps. First, both the buyer and seller must agree on the terms of the wrap around agreement, including the purchase price and interest rate. The buyer then assumes the existing mortgage payments while making additional payments to the seller. It is crucial to ensure that the existing mortgage allows for this type of arrangement, as some lenders may have restrictions. Legal advice may also be beneficial to ensure compliance with all applicable laws and regulations.

Key elements of the Texas Wrap Around

The Texas Wrap Around includes several important elements that must be clearly defined in the agreement. These include:

• Purchase Price: The total amount the buyer will pay for the property.
• Existing Loan Details: Information about the existing mortgage, including the lender, balance, and payment terms.
• Wrap Around Terms: The interest rate and payment schedule for the wrap around loan.
• Responsibilities: Clarification of responsibilities for property taxes, insurance, and maintenance.

Steps to complete the Texas Wrap Around

Completing a Texas Wrap Around involves a series of steps to ensure that the transaction is legally binding and properly documented:

1. Negotiate the terms of the wrap around agreement with the seller.
2. Draft the Texas Wrap Around agreement, including all key elements.
3. Obtain any necessary approvals from the existing lender.
4. Execute the agreement, ensuring all parties sign and date the document.
5. File the agreement with the appropriate county office if required.

Legal use of the Texas Wrap Around

The Texas Wrap Around is legally recognized in Texas, provided that all parties comply with state laws and the terms of the existing mortgage. It is essential to ensure that the wrap around agreement does not violate any terms of the original mortgage. Additionally, both buyers and sellers should be aware of their rights and obligations under this arrangement. Consulting with a real estate attorney can help clarify legal implications and ensure compliance with local regulations.

Examples of using the Texas Wrap Around

Consider a scenario where a homeowner has a mortgage with a low interest rate but needs to sell their home quickly. A buyer interested in the property can enter into a Texas Wrap Around agreement, allowing them to make payments to the seller while the seller continues to pay the existing mortgage. This arrangement can be advantageous for both parties, as the seller can sell the property without refinancing, and the buyer can benefit from the existing loan terms.