Wraparound Mortgage
A new, larger loan that wraps around an existing loan that stays in place, with the borrower paying the new lender who continues paying the old one.
A wraparound mortgage is a new loan that includes, or wraps around, the balance of an existing loan that remains in place. The buyer makes one payment to the seller or new lender, who then continues paying the underlying original loan.
It only works when the existing loan has no enforceable due-on-sale clause that would block the arrangement.
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- Mortgage
A security instrument that pledges real property as collateral for a debt. In Texas, lenders use a deed of trust to play this role.
- Due-on-Sale Clause (Alienation Clause)
A mortgage clause that lets the lender call the full balance due if the borrower transfers the property without paying off the loan.
- Purchase-Money Mortgage
A mortgage the buyer gives as part of the purchase price, commonly when the seller finances part of the sale.
This definition is Texas real estate exam-prep education, not legal, tax, or professional advice. Verify current rules against the official source before relying on them for a real transaction. Back to the full glossary.