Understanding the benefits of a Purchase Money Mortgage (PMM)
A Purchase Money Mortgage means that the seller steps into the role of the bank by holding the deed to a property after it is sold. The buyer makes the monthly mortgage payment directly to the seller. The terms are set prior to closing and include the monthly interest rate and payment, length of the loan, principal and interest or interest only, and the balance due at the end of the term.
Seller Benefits:
1. The seller can make substantially more interest than a savings account can provide.
2. If, for some unforseen reason, the buyer is unable to make the payments, the property goes back to the seller.
3. If the property needs substantial repairs it can be more attractive to buyers willing to do the work.
3. The property is available to more potential buyers.
Buyer Benefits:
1. The property could fit the needs of buyers with challenging credit.
2. The possibility of a lower down payment makes the property more attractive.
