This creative financing helps buyers purchase homes without traditional bank loans.

We also know that many sellers get tired of receiving installments and would rather have a lump sum of cash now. They seek out our services when they decide to sell their owner-financed mortgage, cash flow note, or land contract.

But what is seller financing?

If you are thinking it’s a trick question – you’re right. Seller financing and owner financing are just different names for the same thing. We often use the terms interchangeably.

Is one phrase used more often?

To answer this question we turned to Google, the powerhouse of Internet search engines. And, the results just might surprise you.

The clear people’s choice winner, by an overwhelming 5 to 1 lead, was… Owner Financing!

Here is an overview of the results based on monthly search volume for the following terms:

• Owner Financing         135,000
• Owner Finance            110,000
• Owner Financed            74,000
• Seller Financing            27,100
• Seller Financed               8,100
• Seller Finance                 4,400

Source: Research obtained from https://adwords.google.com/select/KeywordToolExternal

The choice between owner versus seller is often based on where people live, but on average people across the US use some form of  “owner financing” over “seller financing”.

What do you say more often? Leave us a comment below to let us know your favored term along with the state you live in!

About the Author:  Tracy Z. Rewey has spent 20 years making money with owner financing.  All those hard earned lessons are shared in Personal Profit Series: Notes - The Complete Moneymaking System to Buying Referring, Creating, and Holding Real Estate Notes!

When a seller allows a buyer to make payments over time for the purchase of property, it is known as owner financing or seller financing. This private financing by the seller can take the place of a bank loan or be in addition to a conventional mortgage.

The payment amount, interest rate, and other terms are agreed upon between the buyer and seller. The amount financed by the seller will depend upon the buyer’s down payment and whether there are any bank loans.

Here’s an example of how it works.An owner advertises his or her house for sale, either on their own or through an agent. A buyer makes an offer, and they agree upon a sales price of $175,000 with a 10 percent down payment of $17,500.

Rather than requiring the buyer to obtain a bank loan, the seller carries back the balance of $157,500 in the form of a note and mortgage. It could also be a note and deed of trust or a real estate contract, depending on the customary documents for that state. A title company or real estate attorney is often used for the closing.

The note spells out the terms of repayment. In this case they agree upon 8.5 percent interest at $1,211.04 per month based on a 360-month amortization. The seller doesn’t really want to wait a full 30 years for payments, so the note requires payment in full, known as a balloon payment, within seven years.

Because the buyer is making payments to the seller rather than an institutional lender, the legal arrangement is called a private mortgage, seller carry-back, or owner financing. The seller has the same mortgage rights as a bank, so if the buyer does not make payments, the seller can foreclose and take the property back.

Should the seller prefer cash today rather than payments over time, the rights to future payments can be sold or assigned to a note investor on the secondary market.

Also check out  - 5 Reasons Sellers Offer Owner Financing.