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Advantage #1: There is no involvement of a traditional lender. Advantage #2: The seller gets to flexibly establish the terms and conditions of the sale. Advantage #3: The buyer can close immediately and counter with terms and conditions to the seller.
This is called a purchase money mortgage, because this type of mortgage usually replaces part or all of the cash that the buyer would otherwise pay the seller. For example, a buyer might pay for a $500,000 house with a $400,000 bank mortgage, $60,000 in cash, and a $40,000 purchase money mortgage.
Also known as seller financing, a purchase-money mortgage is a loan the property seller provides to the home buyer. This type of mortgage is common in situations where the buyer doesn't qualify for standard bank financing, much like other non-conforming loans.
The borrower gives a right or interest to the lender called a mortgage. The borrower is the mortgagor and the lender or bank is the mortgagee.
: the consideration paid or to be paid by the purchaser of property.
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The main differences between a purchase-money mortgage and a mortgage from a bank are the qualifying requirements and who holds the deed. In a traditional mortgage, the bank holds the deed. With a purchase-money mortgage, the seller holds the deed.
Sometimes, a person buying real property gives the seller a mortgage on the property as part of the deal to buy the property. This is called a purchase money mortgage, because this type of mortgage usually replaces part or all of the cash that the buyer would otherwise pay the seller.
Purchase money loans, also known as seller financing or owner financing, allow buyers to avoid banks altogether by having the seller step in as the lender. It's used mainly for buyers who might have difficulty qualifying for a bank loan. This is different from a traditional home sale with a bank.
: the consideration paid or to be paid by the purchaser of property. purchase money. adjective. Legal Definition of purchase money (Entry 2 of 2) : involving or being a debt secured by the property purchased with the money borrowed \u2014 see also purchase money mortgage at mortgage.
Primary tabs. Sometimes, a person buying real property gives the seller a mortgage on the property as part of the deal to buy the property. This is called a purchase money mortgage, because this type of mortgage usually replaces part or all of the cash that the buyer would otherwise pay the seller.

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