Wrap Around Mortgage

A wrap around mortgage is another type of owner financing that is ideal when you have an underlying mortgage along with some equity.  The seller simply creates a brand new mortgage and it just “wraps around” the existing mortgage.

For instance:

Current Home Value:  $250,000

Current Mortgage Balance $200,000

If the seller sold the home for $250,000 with a loan of $230,000, the wrap-around mortgage breakdown would be the underlying lien of $200,000 and a second lien from the seller of $30,000.

This is another great method of selling a home in a market where a seller does not want to lose their hard-earned equity and it has proven to be difficult to find buyers who can get conventional financing.

Some of the advantages of a wrap around mortgage are…

  • Higher asking price
  • Little to no closing costs
  • Typically no realtor commissions
  • Can improve the sellers credit
  • Faster home sale
  • Market to a larger pool of buyers

The main disadvantage to a mortgage assignment is…

  • If the buyer stops making payments, the seller will get the house back by either a foreclosure or a deed-in-lieu.

We may be interested in buying your home using this method or perhaps helping you broker the deal to another buyer.