Purchase-Money Mortgage

What is a 'Purchase-Money Mortgage'

A mortgage issued to the borrower by the seller of the home as part of the purchase transaction. This is usually done in situations where the buyer cannot qualify for a mortgage through traditional lending channels. This is also known as seller or owner financing.

BREAKING DOWN 'Purchase-Money Mortgage'

A purchase-money mortgage might be offered by the seller as incentive to purchase a property. This can be used in situations where the buyer is assuming the seller's mortgage, and the difference between the balance on the assumed mortgage and the sales price of the property is made up with seller financing.

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RELATED FAQS
  1. What is an assumable mortgage?

    The purchase of a home is a very expensive undertaking and usually requires some form of financing to make the purchase possible. ... Read Answer >>
  2. What are the benefits of an assumable mortgage?

    An assumable mortgage allows the purchaser of a property to assume the mortgage from the property's seller. The benefits ... Read Answer >>
  3. What is the process to take over a mortgage through a loan assumption?

    My landlord wants me to take over her mortgage.  ... Read Answer >>
  4. Are FHA loans assumable?

    Learn the advantages and disadvantages of assuming an FHA-insured mortgage. Assuming loans with lower interest rates can ... Read Answer >>
  5. If my mortgage lender goes bankrupt, do I still have to pay my mortgage?

    Yes, if your mortgage lender goes bankrupt you do still need to pay your mortgage obligation. Sorry to disappoint, but there ... Read Answer >>
  6. What are the pros and cons of a simple-interest mortgage?

    Learn the difference between a simple interest mortgage and a standard mortgage, along with their relative advantages and ... Read Answer >>
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