Mortgage And Deed confusion (quick response needed)

I was at NYC’s local city Register and I was looking up a few potential deals but I keep getting confused by the following.

  1. Party one(Seller) to party 2 (buyer)
    Document Type: DEED Doc amount: $475,000

But then it also says:

Party 2 (buyer) to MERS
Document Type: Mortgage Doc amount: $160,000

This is all recorded at the same time. What does this mean? Did the buyer take out two loans?
That would mean he was a total loan of 635k? I’m kinda confused.

I’m going to meet with this seller tomorrow so if you guys could please respond. Thanks alot.

Hmm thats a tuff one. It sounds like 2 mortgages, but then looks like they purchased 475K and have a 160K mortgage.

What is the value of the house? Is it possible they owe the 635K

Thats a lot of money to put down. Can you click through to see the actual docs? We can here in Florida. I can see the actual note - every single page.

Ok I started reading the pages and on the deed doc- it says the full price 475k
and the mortgage doc -*a check is marked through a box that says this security instrument covers real property improved, or to be improved, by 1 or 2 fam dwelling only. I assume that the 160k is a second mortgage meant to improve the property but for some reason was never put in use right?

The first document is a deed transferring ownership of the property and simply states the sales price at $475k. This is NOT a mortgage. The second document is a mortgage (security instrument) for a loan of $160k. I’ll assume the $160k is a first mortgage since there is nothing else noted in the records. Do your homework and ask lots of questions to ensure you are clear on the details.

So how is it that the sales price is 475K and a mortgage of 160k ? Maybe he created a note or something? I dont think he paid cash.

maybe he has a first or second with the original seller of the property…was any part of it land contract?

OR buyer paid cash for all but 160k…


It all means that this person paid $475K for the property. Of that $475K, only $160K was financed.

Even if you pay all cash for the property, you still get a deed. The deed transfers title from the seller to the buyer and may state the price paid for the property (varies from state to state).

If you put some cash down and finance the rest, you give the lender a mortgage that pledges the property as security for the amount of the loan you obtained to complete the purchase. You GIVE a mortgage to GET a loan.

Both the deed and the mortgage are recorded at the courthouse.

The difference between the $475k sale price and $160k recorded mortgage could have been all cash or seller financing that has yet to be recorded?

While it could be an unrecorded second, I think the most likely scenario is that the buyer came to the settlement table with the difference in cash. I did the same thing a couple of times myself when my 1031 exchange funds paid more than 50% of the purchase price for my replacement property. In my latest exchange, I “paid” $212K for property that has a first mortgage of only $65K.

Always remember that when a property is purchased with a loan, there will always be two documents recorded: the deed that transfers ownership from the seller to the buyer, and the mortgage which secures the property for the lender. The deed will reflect the purchase price, while the mortage will reflect the amount borrowed to purchase. So if you purchase a $100K property with a loan and put 5% down, the deed will say $100K, while the mortgage will say $95K.

Dave hit the nail on the head. The Buyer did an exchange and taken out a mortgage of 160k. The house, unfortunately, is consider a “tear down” buy local RE agents. So I’ll have to make a low offer. Hopefully I’ll land the deal with a good price.- Thank You guys all for your responses! :biggrin

Maybe other states are different…don’t recall ever seeing the amount paid for a property anywhere on the deed. Usually the deed just says that they’re signing it over for $10, and you have to back in to the actual amount by seeing what the transfer tax is.