{"id":3650,"date":"2024-01-05T08:47:51","date_gmt":"2024-01-05T13:47:51","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=3650"},"modified":"2024-04-25T23:17:01","modified_gmt":"2024-04-26T03:17:01","slug":"buying-without-your-spouse-what-to-know-about-a-purchase-money-mortgage","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/buying-without-your-spouse-what-to-know-about-a-purchase-money-mortgage\/","title":{"rendered":"Buying Without Your Spouse? What to Know About a Purchase Money Mortgage"},"content":{"rendered":"\n
\"\"<\/figure>\n\n\n\n

Sometimes a homebuyer who\u2019s married wants to buy property as an individual. They want to be the sole buyer, with no other name on the closing papers.<\/p>\n\n\n\n

How can it work? Consider the purchase money mortgage<\/em>.<\/p>\n\n\n\n

As Cleveland\u2019s CrossCountry Mortgage\u00ae company explains, \u201cif a married person wants to purchase a property without their spouse being on the loan OR on the title, they can classify the transaction as a purchase money mortgage.\u201d <\/p>\n\n\n\n

With this mortgage, the marriage partner is (a) not responsible for repaying the lender for the mortgage; and (b) not named on the deed.<\/p>\n\n\n\n\n\n\n\n

What Situation Leads to a Purchase Money Mortgage?<\/h2>\n\n\n\n

Sometimes, a couple is separating, and one of them is buying a separate home \u2014 a home that is clearly not the \u201cmatrimonial residence\u201d \u2014 in the lead-up to a divorce decree.   <\/p>\n\n\n\n

This type of purchase is an exception to the norm. When both life partners aren\u2019t on a title, the nontitled partner generally has, as defined by the home state\u2019s law, a right to live in the home, or a right to \u201cequitable distribution\u201d of its value in a divorce. That\u2019s why a buyer\u2019s affidavit of title must disclose a pending divorce case.<\/p>\n\n\n\n

Lawyers can write documents that appropriately extinguish any marital rights under state law, at the current time and forever. See a local real estate lawyer or consult with a family law firm in the home\u2019s state for guidance in a purchase money mortgage.<\/p>\n\n\n\n

After reading about a purchase money mortgage for divorcing couples, you might still be confused about this topic. Perhaps that\u2019s because an internet search brings up wildly different descriptions of a purchase money mortgage. You might have found Deeds.com<\/em> in a quest for clarity. We\u2019ve got you covered.<\/p>\n\n\n\n

Read on to take a look at other definitions of the term purchase money mortgage<\/em>.<\/p>\n\n\n\n

Seller Financing Is Also Sometimes Called a \u201cPurchase Money Mortgage\u201d<\/h2>\n\n\n\n

Some people use the term purchase money mortgage <\/em>when they\u2019re talking about a seller-financed home purchase. But what\u2019s that?<\/p>\n\n\n\n

Imagine a $250K condo for sale. A hopeful buyer offers to pay for a mortgage on the condo as a component of the bargain.<\/p>\n\n\n\n

This purchase money mortgage<\/em> is using the mortgage as part of the money the buyer puts into the deal.<\/p>\n\n\n\n

Say the buyer pays for the condo by taking out a regular $200K mortgage, because that\u2019s what they can qualify for. Where\u2019s the other $50K coming from? Perhaps the buyer offers $30K in cash, and the remaining $20K in a purchase money mortgage \u2014 basically a loan from the seller. (That second mortgage typically has a higher interest rate than the rate on the traditional loan).<\/p>\n\n\n\n

What About Assuming the Seller\u2019s Mortgage as Part of the Deal?<\/h2>\n\n\n\n

A variation on the purchase money theme can happen where a buyer assumes the homeowner\u2019s mortgage, and the parties\u2019 agreement covers the gap between the debt left on the assumed mortgage and the home price.<\/p>\n\n\n\n

FHA loans and other government-backed mortgages are typically assumable (if the buyer meets the lender\u2019s criteria). Buyers cannot normally get permission to assume a mortgage backed by Freddie Mac or Fannie Mae. Read more about <\/strong><\/em>assumable mortgages<\/em><\/strong><\/a> on Deeds.com.<\/strong><\/em><\/pre>\n\n\n\n
So the term purchase money mortgage<\/em> sometimes refers to a mortgage that makes up part of the purchase funds.<\/p>\n\n\n\n
Sometimes, two mortgages are needed for the deal to work, and one is the purchase money mortgage (a.k.a. second mortgage). If this is going on, then the mortgage from the institutional lender (first mortgage) gets #1 priority for payments.<\/p>\n\n\n\n
But sometimes there is the seller\u2019s loan only.<\/p>\n\n\n\n
In any case, the seller keeps a mortgage note, representing the loan. The seller records the note with the county. It\u2019s now a publicly visible and binding document, officially known as a security instrument.<\/em><\/p>\n\n\n\n
What Situation Prompts This Type of Purchase Money Mortgage?<\/h2>\n\n\n\n
\"\"<\/figure>\n\n\n\n
This purchase strategy can make an otherwise unworkable deal work. Consider the following situations:<\/p>\n\n\n\n