Legal Definitions - package mortgage

A package mortgage is a type of home loan that covers not only the real estate itself (the land and the building) but also certain items of personal property that are sold along with the home. These personal items, often built-in appliances, fixtures, or furnishings, are "packaged" into the same mortgage loan, allowing the buyer to finance them over the long term as part of their home purchase.

Here are some examples to illustrate how a package mortgage works:

• Example 1: New Construction with Appliances

  A buyer purchases a newly constructed house directly from a developer. The sale agreement specifies that the purchase price includes the land, the house, and all brand-new kitchen appliances (refrigerator, oven, dishwasher, microwave), a washer and dryer, and custom-installed window blinds. Instead of taking out separate loans for the house and the appliances, the buyer secures a package mortgage. This single loan covers the entire cost of the real estate and all the included personal property.

  This illustrates a package mortgage because the loan bundles the financing for both the immovable property (the house and land) and the movable personal property (the appliances and blinds) into one comprehensive mortgage agreement.

• Example 2: Furnished Vacation Condominium

  A couple decides to buy a fully furnished condominium in a popular resort area. The seller, who used the condo as a rental property, agrees to include all existing furniture, electronics (like televisions and sound systems), and kitchenware (pots, pans, dishes) in the sale price. To simplify their financing, the couple obtains a package mortgage. This allows them to finance the cost of the condominium unit itself and all the personal property within it through a single loan, rather than having to pay for the furnishings separately or with a higher-interest personal loan.

  This demonstrates a package mortgage because the loan encompasses both the real estate (the condominium unit) and the significant amount of personal property (furniture, electronics, kitchenware) included in the sale, financing them together.

• Example 3: Model Home Purchase with Upgrades

  A family falls in love with a builder's model home and decides to purchase it. The builder, wanting to sell the model as-is, offers to include all the high-end staging furniture, decorative items, and the advanced smart home technology system (e.g., integrated security cameras, smart thermostats, automated lighting) that were part of the model's presentation. The family uses a package mortgage to finance the entire purchase. This means their mortgage covers not only the physical structure and land of the model home but also the value of the furniture, decor, and the smart home tech system.

  This example highlights a package mortgage because it combines the financing for the real estate (the model home and its lot) with the personal property items (staging furniture, decor, and the smart home technology system) into one unified loan.