This is when the seller in a transaction offers the buyer a loan rather than the buyer obtaining one from a bank. To a seller this is an investment in which the return is guaranteed only by the buyer's credit-worthiness or ability and motivation to pay the mortgage. For a buyer it is often beneficial because he/she may not be able to obtain a loan from a bank. In general the loan is secured by the property being sold. In these cases, the Purchaser will execute a mortgage with agreed terms and conditions (interest rate, due dates, other terms) and will also execute a Note (promise to pay). In the event that the buyer defaults, the property is repossessed or foreclosed on exactly as it would be by a bank.
Iris I Romero
Sky~Land International Realty