Wraparound mortgage Meaning and Definition

Pronunciation

/ˈræpəraʊnraʊnd ˈmɔrɡɪdʒ/ 🔊

Part of Speech

Noun

Definition

A type of mortgage in which the borrower makes monthly payments to the seller, who is then responsible for making payments on the original mortgage. The wraparound mortgage allows the borrower to avoid a new mortgage and the associated closing costs.

Examples

• The investor used a wraparound mortgage to purchase the property from the homeowner, who was struggling to make payments.
• Wraparound mortgages can be an attractive option for cash-strapped borrowers who need to refinance their home.

Synonyms

• Mortgage wrap
• Deed-to-deed financing

Etymology

The term “wraparound mortgage” originates from the practice of wrapping the existing mortgage around a new loan, creating a single payment stream for the borrower.

Usage Notes

Wraparound mortgages are often used in real estate transactions where the buyer wants to take over the seller’s existing mortgage.

Cultural References

Wraparound mortgages have been featured in various financial and real estate publications, including The Wall Street Journal and Forbes.

Idiomatic Expressions or Phrases

“Wraparound deal” is a common phrase used to describe a financial arrangement that involves a wraparound mortgage.

Related Words or Phrases

Reverse mortgage, owner financing, deed-to-deed financing

Collocations

Wraparound mortgage and property, wraparound mortgage and real estate

Frequency of Use

Wraparound mortgages are relatively uncommon, but they can be a viable option for borrowers who need to refinance their home.

Common Misspellings

Gerbera, wraparound mortgagee, wrap around mortgage