What does "seller financing" refer to?

Seller financing refers to a transaction in which the seller of a property takes on the role of a lender, directly providing financing to the buyer rather than requiring them to secure a mortgage from a traditional bank or financial institution. This arrangement can facilitate the sale of property, especially in situations where the buyer may have difficulty obtaining conventional financing due to credit issues or other barriers.

Under seller financing, the buyer typically makes a down payment and then agrees to pay the seller back, often with interest, over a set period of time. This arrangement can benefit both parties; the seller may find a quicker sale and can often set more favorable terms than what might be available through traditional lending channels, while the buyer has more flexibility in terms of payment and financing options.

Other options describe situations that do not align with the concept of seller financing, as they imply conventional financing arrangements where the seller is not involved as a lender.