What is a Wrap Mortgage
A "wrap mortgage" is a type of seller financing arrangement where the seller extends a mortgage to the buyer, who then makes payments to the seller rather than to a traditional mortgage lender. In a wrap mortgage scenario, the buyer makes payments to the seller, who in turn continues to make payments on the original mortgage. The seller keeps the difference between the payments received from the buyer and the payments made on the original mortgage.
It's important to note that wrap mortgages can be complex and may involve risks for both parties. In Texas, like in many other states, there may be specific regulations and legal considerations governing such transactions. It's highly recommended for both buyers and sellers to seek legal advice before entering into a wrap mortgage agreement to ensure compliance with relevant laws and to fully understand the implications of the arrangement.
Additionally, in some cases, wrap mortgages may not be allowed or may be subject to certain restrictions depending on state or local regulations. Therefore, it's essential to consult with a real estate attorney or a knowledgeable professional familiar with Texas real estate laws and regulations for guidance on wrap mortgages in that specific jurisdiction.
