What characterizes a purchase-money mortgage?

A purchase-money mortgage is specifically defined as a mortgage used to finance the purchase of real property. This type of mortgage typically allows the buyer to borrow money from a lender to help cover the cost of the property being acquired. The key aspect that distinguishes a purchase-money mortgage from other types of mortgages is its direct connection to the purchase of real estate. Therefore, the funds from the mortgage are used exclusively for acquiring the property rather than for refinancing existing debts or financing other projects.

In contrast to other types of financing options, a purchase-money mortgage does not inherently relate to government-backed loans, refinancing existing property, or any specific requirements about down payments. This clarity is essential as it aligns with the core principles of real estate transactions, establishing the purchase-money mortgage as a primary tool for buyers looking to secure financing for their new property.