Purchase-Money Mortgage

Also called seller financing, a purchase-money mortgage is an arrangement where the prospective buyer obtains a mortgage directly through the person selling the home. In most cases, the purchase-money mortgage is done for a buyer who might not otherwise be able to qualify for a loan through a traditional lending channel. In those instances, the seller would step in to fill the void in order to get the transaction done. The purchase-money mortgage is most often done in a buyer's market. When the seller has many different buyer options, they might not want to deal with the hassle and risk associated with a purchase-money mortgage. Because this sort of deal requires the sellers to enter into a long-term financial agreement with the buyer, it is one that is most often done between people or parties who had a decent working relationship prior to the property sale.