W
hile home buyers might hope
that they will qualify for a
mortgage from the usual
financial institutions, such as a bank, they
may find that their spotty credit score
is an obstacle that prevents them from
qualifying. A little known Plan B may be to
get what's known as a wraparound loan.
A wraparound loan is where a home buyer
takes out a loan from the home sellers,
who then "wrap" this new loan around the
mortgage they already owe on a home.
The sellers continue paying the original
What Is a
Wraparound Loan &
Is It Right for You?
mortgage, while the buyers pay off their
own wraparound loan to the sellers, which
the sellers might use to help pay off their
original loan, or else just pocket the money.
Wraparound loans offer certain benefits
to buyers and sellers, although this
arrangement comes with risks. When in
doubt, crunch the numbers with an online
mortgage calculator to see what you can
easily afford. Here's what to know about
wraparound loans, to determine if this type
of mortgage is right for you.
