When someone gets a mortgage to buy a house does the mortgage company give the seller a lump sum of the purchase price? Or does the seller get monthly payments from the mortgage company?

  • 2
    You borrow the money from the bank, via the mortgage. You sign over checks for that money (plus any other money needed, typically at least 20% of the total, minus any "earnest money" you have already put up during the negotiations) as part of the closing process. The seller leaves with the money; you leave with the deed and the mortgage obligations. – keshlam Jul 17 '16 at 21:29
  • This is one of the "too good to be a comment" we discussed at meta last month. – JTP - Apologise to Monica Jul 17 '16 at 23:04

Without getting in to the detailed mechanics of a real estate transaction, the seller receives the proceeds of the property at once, not in payments as the mortgage is paid. Unless, of course, the seller is also the lender; which is unusual.

  • "Seller financing" is more usual with small businesses plus property they stand on – user662852 Jul 17 '16 at 23:17
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    Any lienholders on the property receive proceeds before the seller. If Bob sells a house for $200,000 while he owes $120,000 on a mortgage, then the buyer will give a chunk of money to the title company and the buyer's lender will give a (typically) larger chunk. The title company will then give $120,000 to the holder of Bob's mortgage and the balance to Bob. – supercat Jul 18 '16 at 3:12
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    It's amazing how impossible it is to just give a high level answer without delving in to every single detail and possible scenario, even when I explicitly say that's what I'm doing. If you think this high level two sentence question culminating in "Or does the seller get monthly payments " needs a text book depth answer including the rights and payment of lien holders go ahead and write one. – quid Jul 18 '16 at 3:17
  • @quid: True, considering every case is impossible. But the case where the seller also has a mortgage is not exceptional; if anything is is the most usual case. – MSalters Jul 18 '16 at 9:06
  • @MSalters "Unless, of course, the seller is also the lender; which is unusual." IS... Unless the seller IS the lender. – quid Jul 29 '17 at 20:28

What usually happens is the the buyer will arrange a mortgage, and provide the details to his lawyer. The conveyancing lawyer will then set a date with the seller's conveyancing lawyer and carry out any check required by the mortgage provider and request funds from the provider.

On the date of completion the buyer's lawyer will usually transfer all the agreed sales price to the seller's conveyancing lawyer and the deeds will be transferred over.

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    aka "settlement" – Tim Malone Jul 17 '16 at 20:26
  • The specific details of the process involving lawyers is not universal. I've bought and sold two houses in two different US states; neither I nor the counterparty used a lawyer in any of the four transactions. – user27684 Jul 18 '16 at 5:56

The typical home purchase uses an escrow. This is an account, managed by an agent, that holds the money used to buy the house.

The buyer, the buyer's mortgage provider, and anyone or anything else contributing to the sale pay into the escrow account. The sale does not occur until the escrow account holds whatever remains of the sale amount (less the deposit or any other payments or credits).

When the sale completes, the escrow agent makes payments to whoever is supposed to get the proceeds of the sale. This could be any holders of existing mortgages or liens on the property. The remainder typically goes to the seller in some convenient form such as an ACH transfer.

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