What is a Mortgage Wrap?

A mortgage wrap, or wraparound mortgage, is a type of financing where a new loan is created that includes the existing mortgage. The buyer makes payments to the seller, who continues to pay the original mortgage. This can be beneficial for buyers who can't qualify for traditional loans and for sellers looking to sell quickly. However, it carries risks, like potential foreclosure if the seller fails to pay the original mortgage.

We recommend that if you purchase a property this way, offer (demand?) that you make the underlying mortgage payment and the secondary payment to the seller, providing evidence the mortgage was paid. This gives you control and assures the property will not be foreclosed.