Owner-financing, also called seller-financing, is a term used for properties or businesses that have been sold privately, without the use of a traditional bank to lend the borrower/buyer money. Instead, the seller of the collateral (a business or a property) will finance the sale themselves and carry back a mortgage note or a carry back business note. So why is it important to learn about owner financed mortgage or business notes when selling a property or business?
The property or business seller will act as the bank collecting interest on the money they lend. This transaction can be very beneficial to both buyer and seller as it allows the property sale to move much quicker than traditional transaction using a bank and real estate agent, etc. In addition to the streamlined process, the borrower does not have to prove income and debt-to-income, which usually will not be possible with a bank.