🏡 Wraparound Mortgages in Owner Financing: Pros, Cons & What Buyers Need to Know

A wraparound mortgage is a form of seller financing where the seller still has an existing mortgage on the property. Instead of paying off that loan, the seller creates a new loan to the buyer that “wraps around” the existing one.

• The buyer makes payments to the seller based on the new loan terms.

• The seller continues to make payments on the original mortgage.

• The seller earns a profit on the spread between the two interest rates.

Example: The seller owes $80,000 at 4% interest. They sell the home for $120,000 with a wraparound mortgage at 7%. The buyer pays on the $120,000, while the seller pays off the $80,000 loan and keeps the difference.

✅ Pros of Wraparound Mortgages for Buyers

1. Easier Qualification

• No bank approval needed

• Great for self-employed buyers, recent credit issues, or limited documentation

2. Faster Closings

• Skip the bank paperwork and delays

• Often close in days instead of weeks

3. Flexible Terms

• Negotiate directly with the seller

• Customizable down payment, interest rate, and loan term

4. Lower Upfront Costs

• Fewer closing fees than traditional mortgages

• No lender origination points or underwriting fees

5. Build Equity While You Live

• Unlike rent-to-own, you start building ownership from day one

⚠️ Cons of Wraparound Mortgages to Consider

1. Due-on-Sale Clause Risk

Most traditional mortgages have a clause that allows the lender to call the loan due if the property is sold without their consent. While rare, this is something to be aware of.

How SEPFinancing.com helps: We only work with sellers who understand the risks and are prepared to manage them responsibly.

2. Title Complexity

Sometimes the buyer doesn’t receive the deed immediately (depends on the agreement, ask the seller directly). It’s critical to:

• Work with professionals

• Ensure all documents are recorded properly

3. Relying on Seller to Pay Original Loan

Because the original mortgage remains in the seller’s name, buyers must trust that the seller will continue making payments.

Our safeguard: We use third-party loan servicing to ensure all payments are handled transparently and securely.

🤝 Is a Wraparound Mortgage Right for You?

If you’re ready to:

• Own a home without a bank loan,

• Lock in a property today,

• And want flexible terms...

...a wraparound mortgage could be your ideal solution.

At SEPFinancing.com, we offer owner-financed homes across the country, including options with wrap mortgages that are structured to protect both buyer and seller.

🏘️ Browse Our Owner-Financed Homes

Ready to get started?📍 Explore homes available now with flexible wraparound financing options at🌐 www.SEPFinancing.com/buy