What is a wraparound mortgage?

A wraparound mortgage is a type of financing that is used in real estate transactions in the state of Virginia. It allows a seller to accept a loan from a buyer that includes the balance of the existing loan that the seller has on the property, plus any additional funds that the buyer wants to borrow. The buyer pays the seller a single monthly payment to cover the original loan and all additional funds that the buyer has borrowed. The seller, in turn, uses the money from the buyer’s payment to pay the remaining balance of the original loan, plus any interest that is due. Wraparound mortgages can be used to finance the purchase of a home or other real estate without having to obtain a loan from a traditional lender. Wraparound mortgages are often more attractive to buyers and sellers because they can offer more flexible terms and conditions than a traditional loan. This flexibility often means that the buyer can get a better interest rate on the loan and can pay a lower closing cost than a traditional loan. Additionally, wraparound mortgages may include features such as pre-payment penalties, which can help protect the seller from buyers who cannot pay back the loan in full. Wraparound mortgages are often useful to buyers and sellers who are looking to avoid foreclosure or complete a sale quickly. The flexible terms of the loan can make it easier for a buyer to finance the purchase of a home in Virginia, and can offer the seller more control over the sale process.

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What is a wraparound mortgage?

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