Finance category
Mortgage, loan, investing, tax, and money calculators.
Wrap Fee Calculator
A wrap-around mortgage captures the spread between a seller's low legacy rate and a buyer's new note at market rate. This calculator sizes the monthly spread and seller equity retained in the wrap.
Buyer pays seller (monthly)
$2,168
Seller pays old loan (monthly)
$1,210
Seller's monthly spread
$958
arbitrage cash flow
Annual spread
$11,491
Seller's equity in wrap
$65,000
wrap − existing balance
How the math works
A wrap-around (all-inclusive) mortgage means the buyer pays the seller on a new, larger note (the wrap). The seller continues paying the original mortgage and keeps the spread as income. Works best when the seller's original rate is well below current market.
Due-on-sale risk applies — the underlying lender could accelerate on discovery. Use a third-party servicer to ensure the underlying mortgage stays current; never let the seller directly hold buyer payments while neglecting the existing loan.
How to Use
- Enter the existing first mortgage balance, rate, and monthly payment.
- Enter the wrap note amount (sale price minus down payment) and the rate charged to the buyer.
- Enter wrap amortization period.
- Read seller spread: buyer payment minus existing loan payment.
Frequently Asked Questions
Is a wrap-around the same as subject-to?
Related but different. Subject-to takes title with existing mortgage in place — buyer pays at seller's legacy rate. Wrap-around adds a new overlay note at a higher rate, capturing spread for the seller. Wraps are more common when the seller wants income.
Does due-on-sale apply?
Yes — same risk as subject-to. The underlying lender can call the loan if they discover the wrap. Use a professional servicer and consult a real estate attorney for documentation.
Who handles the payments?
Always use a licensed loan servicer. Buyer pays servicer; servicer pays underlying mortgage; servicer pays seller the spread. Eliminates trust issues and ensures the underlying mortgage stays current.
When does a wrap make sense?
When the seller has a low legacy rate and wants income, the buyer can't qualify for bank financing, and both are comfortable with due-on-sale risk. Works best in normal markets — distressed sellers usually need cash, not a note.
Related Calculators
Subject-To vs Seller Financing Calculator
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Seller Carry Calculator
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Land Contract Calculator
Installment sale with retained title.
Owner Finance Note Calculator
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Blended Interest Rate Calculator
Compute the blended rate on wrap vs underlying.
Amortization Calculator
Full amortization of any wrap note.
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