Purchase Money Mortgage

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FLORIDA REAL ESTATE SALES ASSOCIATE COURSE

Types of mortgages

Section 24 of 72

A purchase money mortgage (PMM) is the technical term for seller financing. In this scenario, the seller effectively acts as the bank. Instead of the buyer getting a loan from a traditional lender to pay the seller, the buyer gives a down payment to the seller along with a mortgage and a promissory note for the remaining balance. The seller "takes back" the note and collects monthly payments directly from the buyer. This is often used when a buyer cannot qualify for a traditional bank loan or when the seller wants to offer an incentive to close the sale quickly.