Definition
Seller financing is a home sale where the seller acts as the lender and the buyer makes payments directly to them. This is an alternative to a traditional mortgage from a bank.
Understanding Seller Financing
Seller financing often appears during home sales when traditional financing isn't an option. It allows the seller to act as the lender, creating a private loan for the buyer. This can simplify the process, as fewer parties are involved. Example: For a $200,000 home, a buyer might pay 10% down ($20,000) and finance the remaining $180,000 directly with the seller. Payments would be agreed upon by both parties. It's not a solution for everyone, as it typically requires the seller to own the home outright. This arrangement doesn't mean avoiding all traditional checks like credit assessments, but it can provide flexibility in negotiations.
