What Is a Wraparound Mortgage?
A WRAP is owner financing: you sell your home, keep your existing low-rate mortgage, and a new note is issued to the buyer at a higher rate. A mortgage servicer handles all payments — you stay hands-off and receive the delta (your passive income) every month.
Hands-Off for You
A servicer is hired to manage the loan. The buyer pays the servicer. The servicer pays your original mortgage and sends the delta (the spread) to you. You never chase a payment — buyers and sellers never have to communicate directly.
Premium on Your Price
Buyers pay full price — even above market — for below-market financing. When conventional rates are 7%+, offering 5–6% financing is a massive advantage that commands a higher sale price.
Cash at Closing
The buyer's down payment hits your pocket at closing, minus transaction costs. You get a lump sum upfront plus ongoing income — without listing commissions eating into both.
How the Payment Flow Works
Buyer Pays Servicer
The buyer sends their monthly payment to the mortgage servicer — not to you. One point of contact, one payment.
Servicer Pays Your Mortgage
The servicer pays your original lender (underlying note) on time, every time. Your credit stays clean; the loan stays current.
Delta Goes to You
After paying the bank, the servicer sends you the delta — the spread between the buyer's payment and your payment. That's your passive income.
You Stay Out of the Middle
Buyers and sellers never communicate directly; the seller never has to hunt for a payment. The servicer handles it all.
Why Styer Mortgage?
I have extensive experience with wraparound financing. I provide a full ecosystem: specialized attorneys, title companies, and insurance referrals so your WRAP is structured and closed correctly. If you're considering seller financing — or you're a realtor with a seller who has a sub-4% loan — call me at (512) 956-6010 to talk through the deal.
A Note for Realtors
A WRAP can save a deal that won't survive current rate conditions. If your seller has a sub-4% loan and is struggling to attract offers at their price, seller financing eliminates the buyer's rate barrier entirely. Call Adam at (512) 956-6010 to talk through the structure for a specific listing.
Run the Numbers
Dual-note amortization. Results update as you type. Cash at closing and net payoff at balloon are the two key seller wins.
Your existing loan
Wrap terms (buyer)
- Cash at closing —
- Projected net payoff at balloon —
- Buyer down payment—
- Wrap loan amount—
- Wrap monthly P&I—
- Your payment to bank—
- Cumulative spread to balloon—
Gross spread only — ignores escrow, reserves, servicing. Estimates only. Call Adam to discuss structure and due-on-sale risk.
Frequently Asked Questions
Owner financing is fully legal in Texas and is governed by Chapter 5 of the Texas Property Code (Sections 5.061–5.086). Texas has some of the most detailed seller-finance laws in the country, including required disclosures, balloon payment restrictions, and mandatory annual accounting statements to the buyer. You'll want a real estate attorney experienced in Texas owner financing — not a generalist — to draft the promissory note and deed of trust correctly.
Almost all conventional mortgages originated in the last 30 years include a due-on-sale clause — technically allowing the lender to demand full repayment when the property transfers. In a WRAP, you're keeping your mortgage in place without lender approval, which triggers this clause. The practical risk: lenders rarely enforce it when payments are current, especially on well-performing loans. But the risk is real and should be understood. Some sellers mitigate this through a land trust structure. Talk to an attorney.
If the buyer defaults, your existing mortgage payment is still your obligation — the bank doesn't care about your arrangement with the buyer. You must keep paying to protect your credit and avoid foreclosure. You can then foreclose on the buyer through the Texas owner-finance process. This is why a substantial down payment matters: it gives the buyer real skin in the game and gives you a financial cushion. A good attorney will also require mortgage insurance and an escrow account for taxes and insurance.
Owner-finance buyers are everywhere right now — self-employed borrowers who can't document income the conventional way, buyers rebuilding credit, entrepreneurs, and investors. "Owner financing available" in your listing description will generate significant inquiries. You can also list on sites that specialize in owner-finance properties. Unlike traditional buyers, these buyers often close faster with fewer contingencies because they're not dependent on bank approval.
Yes. A loan servicer (such as a title company or specialized mortgage servicer) collects the buyer's payment, forwards your underlying mortgage payment, and provides annual statements — which Texas law requires. The cost is usually $25–$50/month and is worth every penny. It keeps the transaction arm's-length, creates a paper trail for both parties, and protects you if there's ever a dispute.
Thinking About Seller Financing?
This calculator gives you the math. Adam can give you the strategy — structuring, risk, attorney referrals, and whether it makes sense for your specific situation.