Is an owner “take-back” a good way to finance a home?
Such financing is fine as long as it meets the usual standards you would expect with a loan — a competitive interest rate, no short-term balloon note, a full credit check and tax returns for the borrower, the right to prepay in whole or in part without penalty, a deed of trust rather than a "mortgage," (so there is a trustee to accept a pay-off in case the owner is not available), documents satisfactory to each party’s attorney, etc.
Buyers and sellers will still want many of the protections lenders require such as a title search, title insurance, termite inspection, survey, a proper deed, etc.
For details, buyers should consult with an attorney while sellers are best served by obtaining advice from an attorney, tax professional, and financial planner.
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