On occasion a buyer will request to have the seller hold a second mortgage to help facilitate the purchase of their home. The seller may agree if they do not require all the proceeds from the sale of their home in order to purchase their next home. The advantage to the buyer is that by combining your down payment and the second mortgage from the seller, you may be able to avoid paying mortgage insurance and save yourself some money.
If such a request is part of your offer, you should include the terms in which you will repay the second mortgage (time span, interest rate, etc..). Keep in mind that your first lender needs to know this information so they can underwrite your loan. The minimum term of the second mortgage can be five years. The minimum payment can also be “interest only”. Longer mortgage terms and payments that also include principle are also acceptable.