A way of financing where the existing loan of the seller remains intact. The buyer makes payments to a wraparound noteholder that in turn pays the existing mortgage.

a form of second mortgage

a junior mortgage which secures a promissory note with a face amount equal to the sum of the principal balance of an existing mortgage note plus any additional funds advanced by the wraparound lender"

a level of financial debt created against an asset (such as a property) that is currently mortgaged

a loan arrangement in which an existing loan is kept and a

a type of mortgage in which the seller of the home you're purchasing also acts as your lender

Seller keeps original mortgage. Buyer makes payments to seller, who forwards a portion to the lender holding the original mortgage.

The financing technique in which the payment of the existing mortgage is continued by the seller and a new, higher interest loan, which is larger than the existing mortgage, is paid by the borrower.

A junior mortgage that acknowledges and includes an existing mortgage loan in its principle amount due and in its payment conditions. Payment is made to the holder of the wrap, or his or her agent, who in turn makes payment on the existing mortgage. The purpose is to gain some advantages in lower interest cost on an existing loan, to hold the mortgage priority of an existing loan, and to retain an element of control over the loan payments.

A mortgage that contains not only the amount to be loaned to purchase a property, but also the remaining balance of that property's previous mortgage. GO TO TOP

A mortgage held by the seller-mortgagee. The buyer-mortgagor pays the seller-mortgagee the debt service on the wraparound mortgage and the seller-mortgagee continues to pay the debt service on the underlying or original mortgage.

junior mortgage that acknowledges and includes an existing mortgage loan in its principal amount due and in its payment conditions. Payment is made to the lender of the wraparound mortgage, then that lender makes payments on the previously existing mortgage loan. The most common example of wraparound mortgages are full seller financing (where the seller still has a mortgage on the property that has not been paid off). For example, Justin is selling a building to Danielle for $200,000. Danielle has $10,000 in cash for down payment but asks Justin to hold a seller-held mortgage for the remaining $190,000 (because Danielle currently cannot qualify for a loan). However, Justin still has a $70,000 mortgage with XYZ Bank on the property. If Justin agrees to Danielle's proposal, that trust deed or seller-held mortgage (between Justin and Danielle) will be a wraparound mortgage― effectively "wrapping around" the $70,000 XYZ Bank mortgage. Danielle will make payments to Justin, who will then use a portion of the payments to make the payments to XYZ Bank.

A new mortgage that includes the remaining balance on an old mortgage, plus a new amount.

A loan given to a buyer for the remaining balance on a seller's first mortgage and an additional amount requested by the seller. Payments on both amounts are made to the lender who holds the wraparound loan.

A mortgage (trust deed) that encompasses existing mortgages and is subordinate to them. The existing mortgages stay on the property and the new mortgage wraps around them. The existing mortgage usually carries a lower interest rate than the one on the new mortgage loan. This loan is a type of seller financing. It is often used with commercial property where there is substantial equity in the property, and the existing first mortgage has an attractive low interest rate. By obtaining a wraparound, the borrower receives dollars based on the difference between current market value of the property and the outstanding balance on the first mortgage. The borrower amortizes the wraparound mortgage which now includes the balance of the first mortgage, and the wraparound lender forwards the necessary periodic debt service to the holder of the first mortgage. Thus, the borrower reduces the equity and at the same time obtains an interest rate lower than would be possible through a normal second mortgage.

A mortgage on a property that already has a mortgage, where the new lender assumes the payment obligation on the old mortgage, resulting in an interest rate somewhere between the old rate and the current market rate.

A technique in which the lender assumes payment of the existing mortgage and give a new, increased mortgage to the borrower at a higher interest rate. The new mortgage "wraps around" the existing one.

A secondary financing option in which new money borrowed is blended with money already owed and registered on title to the property. A second mortgage is registered as security for the new money but the old mortgage remains in existence and the rate of interest is a blend of the rate chargeable on the old mortgage and the rate chargeable on the newly borrowed money.

A mortgage that includes the remaining balance on an existing first mortgage plus an additional amount requested by the mortgagor. Full payments on both mortgages are made to the wraparound mortgagee, who then forwards the payments on the first mortgage to the first mortgagee.

A method of financing in which the new mortgage is placed in a secondary or subordinate position; the new mortgage includes both the unpaid principal balance of the first mortgage and whatever additional sums are advanced by the lender. Sometimes called an all-inclusive loan, an overriding loan or an overlapping loan. In essence, it is an additional mortgage in which another lender refinances a borrower by lending an amount over the existing first mortgage amount, without cashing out or disturbing the existence of the first mortgage. The entire loan combines two or more debts and is treated as a single obligation, and the wrap, or secondary, mortgagee pays the obligations of the first mortgage from the total payments received. While the wraparound lender makes the debt service payments on the first mortgage, the lender does not assume liability for this first lien. A default on the wraparound mortgage would usually result in a default on the underlying mortgage.

Results when an existing assumable loan is combined with a new loan, resulting in an interest rate somewhere between the old rate and the current market rate. The payments are made to a second lender or the previous homeowner, who then forwards the payments to the first lender after taking the additional amount off the top. Real Estate Agents | Title Insurance Companies | Pest Inspectors

A mortgage that is subordinate to and incorporates the terms of an underlying mortgage. The mortgagor (borrower) makes payments to the mortgagee (lender) who then makes payments on an underlying mortgage. Also referred to as an "all inclusive deed of trust" in some states.

When homeowners have a first mortgage against their property that does not contain a "due-on-sale" clause, they can sell their home to any buyer and hold a wraparound mortgage for the entire amount of the sales price. The result is a mortgage that will wraparound the first. Keep in mind that the sellers remain responsible for the payments on the first lien regardless of whether the new homeowners make their payments.

A method of acquiring additional financing on real estate by placing additional funds in a junior or subordinate position to the existing debt.

Loan arrangement in which an existing loan is combined with a new loan, resulting in an interest rate somewhere between the old rate and the current market rate.

A refinanced home loan in which the balances on all mortgages are combined into one loan.

A mortgage that encompasses the balance of one mortgage plus an additional mortgage loan. Payments are then made to the mortgagee of the wraparound mortgage, who forwards appropriate portions of that money to the mortgagee of the first mortgage.

A loan arrangement whereby the existing loan is retained an a new loan is added to the property. Example : The seller sells his/her property for $200,000. The buyer puts $80,000 down. The seller has an existing loan balance of $100,000 for a remaining period of 25 years at an interest rate of 6%. The seller then makes a wraparound mortgage to the buyer, (where the seller acts as a lender) for $120,000 at 8%. The seller has to continue making payments on his old loan. They buyer has to pay the seller on the new loan. The buyer may at a later date refinance the property and close both loans.

Results when an existing assumable loan is combined with a new loan, resulting in an interest rate somewhere between the old rate and the current market rate. The payments are made to a second lender or the previous homeowner, who then forwards the payments to the first lender after taking the additional amount off the top. American Mortgage of Lake Tahoe 2494 Lake Tahoe Blvd. Suite B5 South Lake Tahoe, CA 96150 Phone: Toll Free: Fax: (530) 542-9285 (800) 542-9285 (530) 542-9290 Licensed by the Dept. of Corps. - Loans in California and Nevada   HOME * ABOUT US * LOANS * QUALIFY * AFFILIATES * FAQ * CONTACT

A type of financing where the seller carries the buyer's loan. Wraparound mortgages are a creative, though rare, way to allow buyers to purchase a home without having to qualify for a loan or to pay closing costs. The contract is made between the buyer and seller with the lender's approval. Here's how it works: (1) the seller holds onto the existing mortgage (2) the seller names the property's selling price (3) the seller offers the buyer a loan at a higher interest rate than the existing mortgage (4) the buyer pays the seller a fixed monthly amount and (5) the seller uses part of this money towards the existing loan and then pockets the difference. Unlike an installment sales contract, the buyer gets title (ownership) of the property at closing. This type of financing isn't common since most mortgages have a due-on-sale clause. Wraparound mortgages are also called all-inclusive trust deeds (AITD).

A financing device that permits an existing loan to be refinanced and new, additional money to be advanced at an interest rate between the rate charged on the old loan and the current market interest rate. The creditor combines or 'wraps' the remainder of the old loan with the new loan at the intermediate rate. The borrower makes one payment, to the new lender, who in turn makes the monthly payments to the original lender. The amount of the wraparound mortgage is the total of the outstanding principal of the first mortgage (which remains in effect) and the additional outstanding funds advanced by the wraparound lender. Yield The annual percentage rate of return earned on a security, as computed in accordance with standard industry practices. Yield is a function of a security's purchase price, coupon rate and maturity.

A second mortgage that leaves the original mortgage in force. The wraparound mortgage is held by the lending institution as security for the total mortgage debt. The borrower makes payments on both loans to the wraparound lender, which in turn makes payments on the original senior mortgage.

Loan which provides a buyer with the amount of the remaining balance on a seller's mortgage plus an additional amount which is requested by seller as part of the contract of sale. Payments are made to the lender who holds the wraparound loan.

A refinancing technique involving the creation of a subordinate mortgage that includes the balance due on the existing mortgage(s) plus that which is due on a new secondary or junior loan.

A secondary financing option in which a new larger mortgage is created to encompass the first mortgage. This large second mortgage is used to preserve the low interest rate on the first mortgage for a potential buyer. back

A wraparound is a way of lowering the barriers of entry to a junior lien or subordinate mortgage; it also expedites process of purchasing a home. A junior lien or subordinate mortgage is a second mortgage that generally sits behind larger first mortgage.