What is seller financing?
Seller financing is an arrangement between a homebuyer and a seller. Also known as owner financing or purchase-money mortgages, a buyer purchases a property in installments until it is paid off in full. These installments generally include principal and interest.
Seller financing avoids the need to work through a bank. Instead of applying for a conventional bank mortgage, buyers sign a mortgage with the seller. Seller financing can be beneficial to both buyers and sellers for the following reasons:
- Transactions move quicker than traditional mortgage transactions.
Less paperwork than a traditional mortgage.
- Payments that can be modified to fit your budget.
Simply put, with seller financing the current homeowner puts up part of the money required to buy a property as a down payment and makes monthly payments.