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Suppose you buy a house for $350,000 and the seller has an outstanding mortgage on which he wants to do a wraparound loan. The existing
Suppose you buy a house for $350,000 and the seller has an outstanding mortgage on which he wants to do a wraparound loan. The existing monthly payment mortgage to be wrapped has 25 years left on the life, a contract rate of 6%, and a current outstanding balance of $280,000. After you make a down payment of $40,000 the seller will give you a wrap loan for $310,000 at 7.50% for 25 years, monthly payments. What is the effective equity yield to the wrap lender?
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