wraparound mortgage

Definition

A secondary loan that 'wraps around' an existing mortgage, where the new lender pays the original loan. It's financial inception—a loan within a loan, typically used when someone can't refinance.

Example Usage

We structured a wraparound mortgage because my credit is terrible and creative financing beats living with my parents.

Origin

Creative financing technique from the 1970s and 1980s

Fun Fact

Wraparound mortgages violate due-on-sale clauses in most modern mortgages, making them legally precarious and rare outside distressed sales.

Source: Alternative real estate financing terminology

Related Terms

Advanced

conveyance

The fancy legal term for transferring property ownership from one party to another, complete with all the paperwork that makes it official. It's both the act of moving title and the document that proves you now own that thing. Real estate's way of saying 'this is yours now' in the most formal way possible.

🏠 Real Estate

Intermediate

price per door

The total acquisition cost of a multifamily property divided by the number of rental units, providing a quick metric for comparing deals. It's how apartment investors reduce complex investments to a single number they can text each other.

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Beginner

contingent financing clause

A contract provision allowing buyers to back out if they can't secure a loan, essentially making the deal conditional on a bank's approval. It's the escape hatch that makes sellers nervous and buyers sleep better at night.

🏠 Real Estate

Beginner

price per square foot

A metric that pretends all square feet are created equal, whether they're in a penthouse or a basement. It's the real estate version of judging a book by counting the pages without reading any of them.

🏠 Real Estate

Beginner

title

The legal proof that you actually own a property, as opposed to just living there and hoping no one notices. It's the document (or more often, the abstract concept) that gives you the right to sell, modify, or otherwise lord over your real estate kingdom. Title issues are the stuff of homebuyer nightmares—turns out someone's great-uncle from 1847 might still have a claim to your kitchen.

🏠 Real Estate

Intermediate

burnout factor

The accelerated property deterioration and landlord exhaustion resulting from high-maintenance tenants, frequent turnovers, or challenging neighborhoods. It's the reason experienced landlords develop that thousand-yard stare.

🏠 Real Estate

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