What type of loan may be appropriate if the buyer is obtaining seller financing?

A wrap-around mortgage is a type of seller financing that can be particularly beneficial in situations where the buyer is working directly with the seller to finance the property purchase. In a wrap-around mortgage, the seller continues to hold their original mortgage while creating a new mortgage that "wraps around" the existing loan. The buyer makes payments to the seller, who then uses a portion of those payments to continue making their own payments on the original loan.

This arrangement can be advantageous for both parties: the seller can often receive a higher interest rate than their current mortgage, and the buyer may benefit from less stringent qualifying requirements compared to traditional loans. In addition, wrap-around mortgages can facilitate a smoother transaction in scenarios where traditional financing may be challenging, making them an effective option when seller financing is involved.

Adjustable-rate mortgages, conventional mortgages, and reverse mortgages do not specifically align with the dynamics of seller financing as effectively as a wrap-around mortgage does, which is why the correct choice in this context is the wrap-around mortgage.