Question

Owner Sam has a $75,000 mortgage on his home. Sam sells his home to Bill for $100,000. Bill pays $7,000 down and borrows $93,000 on a new mortgage. This mortgage includes the existing $75,000 mortgage because the new lender will make the payments on the old mortgage. This is an example of a what kind of loan?

Answer 1

wrap-around loan

Step-by-step explanation:

Based on the scenario being described within the question it can be said that the type of loan being described is known as a wrap-around loan. This is a type of loan in which involves the seller's mortgage on the home as well as an additional incremental value that the sums up to become the total purchasing price that the buyer will have to pay the seller over an period of time. Such as is described by the loan that Bill has taken.