What is a wrap loan in commercial real estate?

A wrap loan in commercial real estate is a type of financing arrangement where the lender is able to offer more flexible terms to the borrower than the terms that conventional lenders provide. In this arrangement, the lender agrees to wrap the borrower’s existing debt into the new loan. This allows the borrower to combine all of their current debts, such as mortgages, lines of credit, or other real estate loans, into a single loan with a single payment and more favorable interest rate. This new loan pays off all the existing debts as well as the new debt amount, creating a single loan. In Florida, wrap loans are often used for investment property ownership. They are usually beneficial for borrowers because they often have lower interest rates, allow the borrower to reduce their monthly payments, and may require less cash on hand. Additionally, borrowers in Florida may be able to deduct certain costs associated with the loan, such as points and closing costs, as they would with any other loan. Wrap loans can be a great resource for borrowers in Florida with large real estate investments. They can save them money on interest and reduce their monthly payments, as well as allowing them to combine multiple debts into a single loan. However, wrap loans can be complicated, so it is important for borrowers to understand the terms and risks associated with them before entering into any agreement.

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What is a wrap loan in commercial real estate?

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