In a purchase money mortgage, which party provides the mortgage?

In a purchase money mortgage, which party provides the mortgage?

• A. A Bank Loan
• B. A Mortgage from a Private Party
• C. A Second Mortgage
• D. The Seller Takes Back a Mortgage as Part of the Purchase Price

Answer: (D)

A purchase money mortgage is seller-financed financing. The seller acts as the lender, providing a loan to the buyer to cover part of the purchase price. The buyer signs a promissory note to the seller and, in return, the seller records a mortgage (or deed of trust) on the property to secure repayment. This arrangement is what makes it a purchase money mortgage—the seller takes back the financing as part of the sale price. It differs from a bank loan or a private loan from someone else, which would not be described as purchase money financing unless the seller is the lender. A second mortgage can be involved if there’s already another lien, but the defining point is that the seller provides the financing and holds the mortgage on the property until the note is repaid.

A purchase money mortgage is seller-financed financing. The seller acts as the lender, providing a loan to the buyer to cover part of the purchase price. The buyer signs a promissory note to the seller and, in return, the seller records a mortgage (or deed of trust) on the property to secure repayment. This arrangement is what makes it a purchase money mortgage—the seller takes back the financing as part of the sale price. It differs from a bank loan or a private loan from someone else, which would not be described as purchase money financing unless the seller is the lender. A second mortgage can be involved if there’s already another lien, but the defining point is that the seller provides the financing and holds the mortgage on the property until the note is repaid.