Wraparound Mortgage
Wraparound mortgage: secondary financing that "wraps around" existing mortgage. Includes existing balance + new amount at higher rate. Buyer pays seller; seller pays existing + keeps spread. Example: $10K at 4% existing; $300K at 6% wraparound. Used: high interest rates, credit issues, investment property, and tight credit. Risks: due-on-sale (Garn-St Germain), priority (existing first), seller default (buyer loses), and fraud. Both parties need independent counsel.
How It Works
- Wraps around existing
- Buyer pays seller
- Seller keeps spread
When Used
- High rates, credit issues
- Investment property
- Tight credit markets
Risks
- Due-on-sale trigger
- Seller default
- Both need counsel
Related Terms
Barnes Walker Real Estate
Barnes Walker’s attorneys handle FL wraparound mortgages. Request a legal inquiry for assistance.
Florida Law Reference
Fla. Stat. Ch. 697
Defines mortgages as liens on real property and establishes requirements for mortgage creation, assignment, and satisfaction in Florida.
Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC