What is Owner Financing or Seller Financing
Owner Financing or Seller Financing is the type of financing when the seller of a home finances all or a portion the sale (less the down payment) of his or her own property. A buyer, instead of going to the bank and qualifying for a loan, works directly with the seller and makes payments to the seller. In this case the owner acts as a bank and lends the buyer money needed to purchase the owner's property.
The monthly payment amount, interest rate, or a term of the loan usually depends on whether the property has or does not have an existing loan. If there is an existing loan, the seller might want to cover the existing monthly payments, therefore, may not be very flexible on the monthly payment amount. If the property is free and clear from mortgages, the seller and the buyer agree upon the monthly payment amount, interest rate, and term of the loan.
In order to protect both parties, this purchase and sales transaction generally takes place at a real estate attorney's office or title company and is recorded in the public records.
