The National Directory of Certified Public Accountants

Ask A CPA - Mortgages & Loans

In The Mortgage Process , What Is A Wraparound Mortgage ?

A Wraparound mortgage is a additional junior mortgage taken back by the seller for the amount of the property's purchase price less the buyer's down payment. The existing loan is retained and combined with a new, bigger loan and the interest rate is set between the old rate and the current market rate. A typical wraparound is an interest only loan with a five year balloon or less.

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