What is the purpose of a purchase money mortgage?

A purchase money mortgage is specifically utilized to cover all or part of the sale price of a property when a buyer is acquiring real estate. This mortgage is a type of loan that is obtained simultaneously with the purchase of the property, allowing the buyer to borrow money from the seller or a lender to fund the purchase. It typically enables buyers who may not have enough cash available to acquire a property while structuring the financing around the sale.

This mortgage is distinct from other financing methods, such as refinancing existing loans or funding repairs, as its primary purpose is directly related to the acquisition of the property itself. By focusing on the sale price, purchase money mortgages facilitate property transactions, making homeownership more accessible. Other options like funding repairs or compensating sellers for value fluctuations do not align with the core purpose of this type of mortgage, which is solely to assist with the initial property purchase.