What financial structure allows a seller to retain an existing loan while providing financing to a buyer?

A wraparound mortgage is a financial structure that allows a seller to retain an existing loan while providing financing to a buyer. In this arrangement, the seller creates a new mortgage that "wraps around" the existing loan. This means that the buyer makes payments to the seller based on the new mortgage terms, while the seller uses part of those payments to continue servicing the original loan.

This setup can be beneficial for both parties: the buyer may not need to go through traditional financing channels, which might be advantageous if they're unable to qualify for a conventional mortgage. The seller can also benefit by retaining favorable loan terms they may have because of market conditions prevailing when the original loan was secured.

The other financial structures mentioned do not serve this same purpose. A second mortgage involves borrowing against the equity of a property that already has a primary mortgage in place, but it doesn't provide the seller with a way to finance a buyer's purchase while retaining the initial loan. An equity line of credit involves borrowing against the equity in a property, but it doesn't facilitate a direct loan from a seller to a buyer. A conventional mortgage is a standard lending arrangement between a buyer and a lender, completely separate from a seller's existing loan. Thus, a wraparound mortgage is distinct