Finance
In Montana, a wraparound mortgage (all-inclusive trust deed) involves a seller who:
APays off their existing loan before selling
BCreates a new mortgage that encompasses their existing loan while the buyer makes payments to the seller✓ Correct
CObtains a second mortgage from a bank
DTransfers their existing mortgage to the buyer through assumption
Explanation
In a wraparound (AITD) transaction, the seller creates a new larger mortgage for the buyer that 'wraps around' the existing underlying loan. The buyer makes payments to the seller, who continues paying the original lender.
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Key Terms to Know
Deed of Trust
A security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
DeedA written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
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