Have you considered a Purchase Money Mortgage?

Real Estate Agent with Coldwell Banker Island Properties RB-21063

What is a Purchase Money Mortgage?
* Technically any mortgage on real property executed to secure the purchase money from the buyer is
   considered to be a Purchase Money Mortgage
* Commonly referred to as a mortgage that is taken back by a seller from the buyer in lieu of purchase
* Can be either a single-financed debt, or it can be used to fill a gap between the buyers down payment
   and the new first mortgage

Advantages for the seller
* In a financially stressed market, seller financing may be more attractive to a buyer, resulting in a
   quicker sale    Show me the money
* The sale usually closes quicker
* You may be able to defer income tax liability
* Interest rates provide a great yearly return

Advantages for the buyer
* You may be able to buy property you can not qualify for if relying
   on conventional financing
* Closing costs are usually lower
* The down payment required is usually smaller
* You may not be required to purchase mortgage insurance
* Flexible payment terms may be available
* Unlike an Agreement of Sale, you obtain legal title to the property

If you don't currently qualify for a conventional mortgage, you might consider a Purchase Money Mortgage. It can help a seller realize a high rate of return, and make it easier for a buyer to obtain financing. As with all contracts, it is strongly recommended you consult with an attorney familiar with real estate law.


If you are considering buying or selling a home, condo or land in the South Maui areas of Makena, Wailea or Kihei, or would just like to learn more about owning real estate in Hawaii, give us a call. Providing years of service with Aloha...we are your South Maui experts!

Mike Eddy     REALTOR®(S), ABR®, e-PRO
Sheryl Eddy  REALTOR®(S), B.A.
Mike    (808) 268-2219 Cell
Sheryl (808) 268-2220 Cell

Comments (3)

Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

Mike and Sheryl - It's been awhile since I heard that term, "Purchase Money Mortgage."  I use to hear it a great deal during the early 1980s when we had assumable mortgages, and sellers would carry back a second. 

Jun 20, 2009 09:56 AM
Mike Eddy
Coldwell Banker Island Properties - Wailea, HI
Maui Real Estate Broker

Myrl - I guess it was quite popular when interest rates were so high that people couldn't afford to buy a home. Now it's making a comeback in our area because we have willing and able buyers, but the lenders are making it almost impossible to borrow any money. I'm not sure how we are expected to recover at this rate. - Mike

Jun 20, 2009 11:57 AM
Not a real person
San Diego, CA

I had never heard "seller financing" called "purchase mortgage money" before. I've used seller financing a few times in my past property renovation life.

Jul 04, 2009 11:01 PM