What a wrap around mortgage can mean to you A wrap around mortgage may sound complicated but it is in fact quite straight forward. In the simplest terms this loan is like a second mortgage that will include the first mortgage. SO the borrower will only be paying one mortgage payment. You will be able to leverage lower interest rates on the current mortgage, which leaves you with a higher yield. Oftentimes with a wrap around mortgage the lender is seller. This is very similar to having an old fashioned second mortgage only with a wrap around the first mortgage is not getting paid off as in the other option. Not all loans are able to be turned into wrap around loans, only those that are assumable. This way your obligations will be transferred to others. There are only a couple of different loans that are assumable these days without the permission of the lender and those are FHA and VA loans. You will find such a thing as die on sale clauses in many other loans, which do not allow the property to be sold without being repaid in full first. So no one will be able to assume the mortgage without express permission. People need to know if their loan is being wrapped and that is why escrow discloses this fact in many states. These wrap around loans are especially popular when the market is high, these loans offer an amazing investment opportunity but the risk is considerably high. You will be depending upon others to do what they are supposed to be doing and as you know depending on others can get you in a whole lot of trouble. There are many different ways in which a wrap around loan ca be set up but one of the most dangerous ways is when a third party is involved. In this case you are not only depending on one person but two and the time it takes for you to find out if the payment was even made can be too long for you to do something about it in time if it was not. This affects your credit and it is very important to keep your credit in good shape at all times. Just be careful when you go into a wrap around mortgage arrangement, know who you are dealing with.