Which type of loan is provided by the seller to the purchaser of the property?

Seller financing refers to a situation in which the seller of a property provides direct financing to the buyer as part of the purchase arrangement. In this scenario, the seller essentially acts as a lender, allowing the buyer to make payments over time instead of requiring them to secure a traditional mortgage or financing from a bank or other financial institution. This arrangement can be advantageous for both parties; the seller may find it easier to sell the property and attract buyers who may have difficulty obtaining conventional financing, while the buyer benefits from flexible terms or a lower down payment.

Understanding seller financing is crucial in real estate transactions, especially in markets where traditional financing options may be limited. This method can also help facilitate a sale when economic conditions make it challenging for buyers to qualify for loans through conventional means. In summary, seller financing is a unique arrangement that directly involves the property seller in the financing process for the buyer, distinguishing it from other types of loans.