In Texas, a purchase money mortgage is given:
Question & Answer
Review the question and all answer choices
By the bank to the buyer
A is incorrect because a bank providing a mortgage to a buyer describes a conventional loan, not a purchase money mortgage. Purchase money mortgages involve seller financing, not institutional lending.
By the seller to finance part of the purchase
By the buyer to the seller
C is incorrect because while the buyer gives a note to the seller, the mortgage (security instrument) is given by the seller to finance the purchase, not by the buyer to the seller.
By a third-party lender
D is incorrect because a third-party lender providing financing describes a conventional mortgage, not a purchase money mortgage which is specifically seller financing.
Why is this correct?
B is correct because a purchase money mortgage is specifically when the seller finances part of the purchase by taking back a note secured by the property. This is a form of seller financing where the seller acts as the lender.
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