Agreement of Sale Vs Purchase Money Mortgage

When it comes to real estate transactions, there are a few terms that can be confusing for both buyers and sellers. Two of these terms are “agreement of sale” and “purchase money mortgage”. While they may sound similar, they are actually quite different.

An agreement of sale is a legal document that outlines the terms and conditions of a real estate transaction between a buyer and a seller. It is also known as a purchase agreement or a sales contract. This document includes details such as the sale price, payment terms, contingencies, and closing date. Once both the buyer and seller have signed the agreement of sale, it becomes a legally binding contract.

On the other hand, a purchase money mortgage is a type of financing that a buyer can use to purchase real estate. This type of mortgage is provided by the seller, rather than a bank or other lender. In a purchase money mortgage, the buyer receives a loan from the seller to cover a portion of the sale price, which they will then pay back over time with interest.

So, in simpler terms, an agreement of sale is a document that outlines the terms of a real estate transaction, while a purchase money mortgage is a type of financing that allows a buyer to purchase real estate with a loan from the seller.

It is important to note that not all real estate transactions involve a purchase money mortgage. Buyers can also obtain financing from a bank or other lender. However, if the seller is providing the financing, it is important to make sure that all the terms and conditions are clearly outlined in the agreement of sale.

In conclusion, understanding the difference between an agreement of sale and a purchase money mortgage is essential for anyone involved in a real estate transaction. While they may seem similar, they serve very different purposes and should be used correctly to avoid any confusion or legal issues.