Purchase-money mortgage

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Purchase-money mortgage

A mortgage given by a buyer in lieu of cash when the buyer is unable to borrow commercially for the purchase of property.

Purchase-Money Mortgage

A mortgage in which the home buyer borrows from the seller instead of, or in addition to, a bank or thrift. Purchase-money mortgages usually are made when the buyer cannot qualify for an ordinary home loan due to lack of credit or income. Alternately, a seller may offer a purchase-money mortgage in a mortgage-takeover agreement, that is, when the sale price of the home is equal to what remains on the seller's own mortgage.
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The results in this paper also suggest that subprime lending did not increase homeownership: The number of defaults in a limited sample (about 50 percent) of subprime purchase-money mortgages within two years of origination is almost equal to the estimated number of first-time homebuyers who took subprime mortgages.
However, the rate increases were not so severe as to curtail home-purchase activity, leaving the volume of purchase-money mortgage loans largely unscathed.
The Mortgage Bankers Association reported that applications for purchase-money mortgages rose 7% for the week ending Jan.
As a result, attorneys or title agents who processed traditional purchase-money mortgages for years--if not decades--have suddenly begun to hang out the proverbial shingle, promoting themselves as REO, FHA or short-sale specialists.
Demand for purchase-money mortgages will be quieted by the level and mix of unemployment.

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