Wrap-Around & Bond for Deed Analysis
Analyze the financial structure of a wrap-around mortgage or bond for deed transaction. Compare underlying and proposed terms side by side.
Your Underlying Mortgage
Proposed Wrap-Around Mortgage Terms
Buyer's Monthly Payment
$2,015.78
Your Monthly Spread
$536.40
Annual Cash Flow
$6,437
Cash-on-cash yield on seller equity: 8.0%
Monthly Spread
$536.40
$2,015.78 buyer - $1,479.38 underlying
Annual Cash Flow
$6,437
Net Interest Earned
$157,499
$223,787 earned - $66,288 paid
Seller Equity at Start
$80,000
Amortization Comparison
| Year | Underlying Balance | Wrap Balance | Seller Equity | Monthly Spread |
|---|---|---|---|---|
| 1 | $190,067 | $253,815 | $83,748 | $536.40 |
| 2 | $179,729 | $247,182 | $87,454 | $536.40 |
| 3 | $168,969 | $240,070 | $91,101 | $536.40 |
| 4 | $157,772 | $232,444 | $94,673 | $536.40 |
| 5 | $146,118 | $224,267 | $98,149 | $536.40 |
| 6 | $133,990 | $215,499 | $101,509 | $536.40 |
| 7 | $121,367 | $206,097 | $104,730 | $536.40 |
| 8 | $108,230 | $196,015 | $107,785 | $536.40 |
| 9 | $94,558 | $185,204 | $110,646 | $536.40 |
| 10 | $80,329 | $173,612 | $113,283 | $536.40 |
| 11 | $65,520 | $161,181 | $115,661 | $536.40 |
| 12 | $50,108 | $147,852 | $117,745 | $536.40 |
| 13 | $34,067 | $133,560 | $119,492 | $536.40 |
| 14 | $17,374 | $118,234 | $120,861 | $536.40 |
| 15 | $0 | $101,801 | $121,801 | $536.40 |
| 16 | $0 | $84,179 | $104,179 | $2,015.78 |
| 17 | $0 | $65,284 | $85,284 | $2,015.78 |
| 18 | $0 | $45,023 | $65,023 | $2,015.78 |
| 19 | $0 | $23,297 | $43,297 | $2,015.78 |
| 20 | $0 | $0 | $20,000 | $2,015.78 |
Wrap-Around Mortgage Notes
- •A wrap-around mortgage is a form of seller financing where the seller's existing mortgage stays in place and the buyer makes payments to the seller.
- •Also known as a "contract for deed" or "installment land contract" in many states.
- •The specific legal requirements and buyer protections vary significantly by state. Consult a local real estate attorney.
- •The seller remains responsible for the underlying mortgage payments even though the buyer is making payments to the seller.
What is a Wrap-Around Mortgage?
What is a wrap-around mortgage?
A wrap-around mortgage is a form of owner financing where the seller keeps their existing underlying loan in place and writes a new, larger loan to the buyer that "wraps" around the underlying balance. The buyer pays the seller monthly, and the seller continues making payments on the underlying loan — pocketing the spread between the two.
How is a Bond for Deed different?
In a Louisiana Bond for Deed, legal title stays with the seller until the contract is paid in full. In a typical wrap-around mortgage, title transfers to the buyer at closing. Both produce monthly seller cash flow; they differ in title timing, due-on-sale exposure, and the eviction/foreclosure remedy if the buyer defaults.
What is "monthly spread"?
Monthly spread is the difference between what the buyer pays the seller each month and what the seller owes on the underlying mortgage. A positive spread means the seller pockets cash each month; a negative spread means the seller is out-of-pocket and should reconsider the deal terms.
What is the due-on-sale clause risk?
Most underlying mortgages contain a "due-on-sale" clause that lets the lender call the loan if title transfers. Wrap-around and subject-to deals can trigger this clause. Bond for Deed deals (where title does not transfer until payoff) generally do not, which is one reason they remain popular in Louisiana.
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Disclaimer: This calculator is provided for informational and educational purposes only. Results are estimates based on the information you provide and standard amortization formulas. Actual loan terms, payments, fees, and costs may vary. This calculator does not constitute financial advice, a loan offer, or a commitment to lend. Please consult with a qualified financial professional before making any financial decisions. Southern Loan Servicing, LLC is not responsible for any actions taken based on calculator results.