"Owner financing, sometimes called seller financing, is when the home seller acts as the lender instead of a bank. Instead of applying for a traditional mortgage , the buyer makes payments directly to the seller based on an agreed loan term and interest rate. Think of it like the seller extending credit to the buyer: the buyer pays in installments over time, and the seller holds the financing note until the property is paid off or refinanced."
"Agree on terms: Buyer and seller agree on the purchase price, down payment, interest rate, repayment schedule, and loan term. Sign a promissory note: The terms are put into a legally binding contract called a promissory note , which outlines repayment obligations. Make a down payment: Buyers typically put down a larger amount than they would with a traditional mortgage to reduce the seller's risk"
Owner financing is a purchase method in which the seller serves as the lender, and the buyer makes payments directly to the seller based on agreed terms and interest. The seller holds the financing note until payoff or refinancing. Typical steps include agreeing on price, down payment, interest rate, repayment schedule, and loan term; signing a promissory note; making a larger-than-usual down payment; and paying monthly installments that include principal and interest. Many arrangements include a balloon payment after three to five years, when the buyer may refinance with a traditional lender to settle the remaining balance. Deed transfer depends on state laws and the agreement.
Read at Redfin | Real Estate Tips for Home Buying, Selling & More
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