A purchase money mortgage involves financing by whom?

• A. The seller
• B. The bank
• C. The government
• D. The credit union

Answer: (A)

A purchase money mortgage means the seller acts as the lender. Instead of a bank or other financial institution, the seller provides all or part of the financing for the buyer to purchase the property. The buyer signs a promissory note for the loan amount and the property serves as collateral with a mortgage or deed of trust securing the debt. The buyer makes the payments to the seller, who earns interest over the term. This setup is often used when the buyer can’t obtain traditional financing or the seller wants to facilitate the sale. In standard real estate loans, financing would come from a bank, government program, or credit union, not the seller.