What is a wraparound mortgage?

A wraparound mortgage is a type of real estate financing in Washington state. It is a loan that allows a homeowner to refinance their existing mortgage and obtain additional financing without having to pay off the existing loan. The lender agrees to accept the existing mortgage loan as collateral on the new loan. This type of loan allows a homeowner to obtain a larger loan amount, as well as a lower interest rate than they would be able to get with a traditional loan. The mortgage is referred to as a wraparound because it "wraps around" the existing loan. The lender takes the existing loan and adds the additional financing into the loan amount. The homeowner then makes one payment to the lender, which the lender uses to pay off the existing loan and any other obligations. Wraparound mortgages allow homeowners to obtain additional financing without having to pay off their existing loan. They may be beneficial to homebuyers who are unable to obtain a traditional loan or who are looking for a lower interest rate. They may also enable a homeowner to borrow more money than they would have been able to with a traditional loan. However, borrowers should be aware that the wraparound mortgage includes the existing loan, and the lender has the right to foreclose on the property if the borrower defaults on the payments.

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What is a wraparound mortgage?

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