Investopedia

Continue to Site »

Wrap-Around Loan

Filed Under » , ,
Dictionary Says

Definition of 'Wrap-Around Loan'

A loan that is most commonly used with property with an outstanding loan. The seller lends the buyer the difference between the existing loan and the purchase price. The buyer's periodic loan payments are sufficient to repay the existing loan as well as the seller's loan to the buyer. When the loan involves mortgage loans, it is also referred to as a wrap-around mortgage.
Investopedia Says

Investopedia explains 'Wrap-Around Loan'

Wrap-around loans are a form of owner financing. Some wrap-around loans require consent from the existing lender, and wrap-around loans cannot be done on properties that include a "due on sale" clause in the loan documentation.

Wrap-around loans can also be structured such that the buyer's payments are directed to the lender, rather than the seller, and the lender then forwards the buyer's payment to the seller.

The owner (lender) should be able to charge a higher interest rate to the buyer that what is currently being paid on the loan. Buyers often seek wrap-around loans when they cannot obtain standard financing or mortgages.

Articles Of Interest

  1.

    Understanding Your Mortgage

    We walk through the steps needed to secure the best loan to finance the purchase of your home.

  2. Make A Risk-Based Mortgage Decision

    Find out how to choose which mortgage style is right for you.

  3. Should You Buy Property On Leased Land?

    Find out what to consider before investing in a leased-land property.

  4. The Reverse Mortgage: A Retirement Tool

    Discover another way to fund your retirement without having to make payments on a loan.

  5. The Fuel That Fed The Subprime Meltdown

    Take a look at the factors that caused this market to flare up and burn out.

  6. How Line of Credit Works

    A line of credit is an arrangement where a bank offers a maximum loan amount that the borrower can draw upon at any time. The borrower – which can be an individual, business or government ...

  7. 6 Tips For Selling Your Home Fast

    Find out what you can do to stand out from the competition and make your home an easy sell.

  8. 5 Smart Ways To Use Your Tax Return

    This year, find out how to stretch your tax refund further to strengthen your future.

  9. Outfox The Debt Collector's Hounds

    Dealing with a collection agency is scary if you don't know your rights. We help you take back the power.

  10. Common Liabilities That Hurt Your Net Worth

    Every penny that you keep out of the liability side of the net worth equation essentially ends up on the asset side.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Validation Period

    The amount of time necessary for the premium on an insurance policy to cover the commissions, the cost of investigation, medical exams and other expenses associated with the issuance of the policy.

  2. Winner's Curse

    Because of incomplete information, emotions or any other number of factors regarding the item being auctioned, bidders can have a difficult time determining the item's intrinsic value. As a result, the largest overestimation of an item's value ends up winning the auction.

  3. Glocalization

    A combination of the words "globalization" and "localization" used to describe a product or service that is developed and distributed globally, but is also fashioned to accommodate the user or consumer in a local market.

  4. Disaster Loss

    A special type of tax-deductible loss, similar to a casualty loss, where a loss has been incurred by taxpayers who reside in an area that has been designated as a federal disaster area by the President.

  5. Fool In The Shower

    The notion that changes or policies designed to alter the course of the economy should be done slowly, rather than all at once.

  6. Pattern Day Trader

    An SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.
Trading Center