Wraparound Mortgage

A wraparound mortgage is a financing arrangement where a new loan "wraps around" an existing mortgage. The buyer makes payments to the new lender, who then uses part of that money to continue paying the original mortgage while keeping the difference as profit. This allows the seller to offer financing without paying off their current mortgage immediately. It can benefit both parties by simplifying the process and potentially reducing interest rates, but it also involves risks like lien priority issues. The buyer typically gains immediate occupancy while making manageable payments directly to the new lender.