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Writer's pictureJerico

Wrap Around Mortgages or Contract for Deed



Mortgage Hack #14


How it works: Also known as a wrap-around land contract or contract for deed, the buyer and seller agree to a seller-financed contract or land contract, but the seller keeps paying on their existing mortgage. A “wrap” is when the owner offers the buyer a new loan while keeping and paying down their original loan. The new loan “wraps” the original loan. They pocket the difference between their mortgage payment and what they are paid on a monthly basis by the buyer.



Benefit to Buyers:

  • Wrap around loans can be easier to qualify for and more flexible.



Benefit to Sellers:

  • Since the wrap around mortgage has a higher rate than the original mortgage, the seller typically makes a profit from the wrap loan.

  • Sellers can profit from interest payments at a higher rate



Reference: 2022 Keller Mortgage LLC


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