Which of the following best describes seller financing?
Correct Answer
B) The seller acts as the lender and carries the promissory note for the buyer
In seller financing, the seller acts as the lender by carrying the promissory note rather than requiring the buyer to obtain a traditional bank loan. The buyer makes payments directly to the seller according to the agreed-upon terms.
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Related Topics & Key Terms
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Related Concepts
RESPA is a federal law that requires lenders to provide borrowers with information about settlement costs, prohibits kickbacks and referral fees, and limits escrow account deposits. It applies to federally related mortgage loans.
The secondary mortgage market is where existing mortgage loans are bought and sold between lenders, investors, and government-sponsored enterprises (GSEs) like Fannie Mae, Freddie Mac, and Ginnie Mae.
TILA is a federal law that requires lenders to disclose the true cost of credit to borrowers, including the annual percentage rate (APR), total finance charges, and loan terms. It is implemented by Regulation Z.
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