What is the name of a financing arrangement allowing payments to a seller who continues paying on an existing loan?

The correct answer is a wraparound mortgage, which is a financing arrangement that enables a buyer to make payments to the seller who retains an existing loan on the property. In this setup, the seller’s existing mortgage remains in place, and the buyer makes payments to the seller that "wrap around" the existing loan. This arrangement allows the seller to receive payments that often cover the existing mortgage payment while providing additional income, and it can be an attractive option for buyers who may find it difficult to secure traditional financing.

In a wraparound mortgage, the seller becomes the lender to the buyer, meaning the buyer generally makes one payment that includes the payment owed on the existing loan plus any additional amount agreed upon with the seller. By doing so, the transaction helps avoid some complications that could arise if the buyer sought an entirely new loan, especially in situations where the current owner’s mortgage may have favorable terms.

The other options represent different types of financing arrangements: a second mortgage involves taking out an additional loan that is subordinate to the first mortgage, a subordination mortgage refers to the prioritization of a loan in relation to other debts, and an equity share agreement is an investment arrangement where the investor shares in the property's appreciation or income. None of these options capture