Seller financing, in which an owner offers a buyer a mortgage, was almost unheard of over the last decade, when money was cheap and lenders vied aggressively for borrowers with myriad mortgage products. But as lending conditions have since tightened drastically and the housing market has softened, seller financing is emerging as an option for both parties.The terms for these transactions may be different from what borrowers would find through conventional lenders, but real estate experts say they are otherwise straightforward. An owner typically agrees to transfer title to the home in exchange for a note and a security interest in the property. The note is paid off like a conventional mortgage, though to the seller instead of a bank. Closing costs may be slightly lower: there’s no need for an appraisal, for instance, because the seller already knows a property’s value.
By Bob Tedeshi, March 25, 2010 NYT

Link to article