What is a seller carry back mortgage?

A seller carry back mortgage is indeed a method of facilitating the sale of a house. This type of financing occurs when the seller of a property finances the purchase for the buyer, effectively allowing the seller to take back a mortgage on the property. This arrangement can enable buyers who may not qualify for traditional financing to secure the home, as the seller may have more flexible terms than a conventional lender.

In many cases, this method can bridge the gap for buyers who might have difficulty obtaining a loan from a bank, often due to their credit history or other financial situations. Additionally, it can be beneficial for sellers as it can help them to sell their property more quickly while potentially earning interest on the loan they provide.

The other choices do not correctly define a seller carry back mortgage. Investment properties often utilize different financing structures that may not involve seller financing. Government-backed loans, such as FHA or VA loans, are designed to provide specific assurances to lenders, whereas a seller carry back is a private arrangement. Lastly, a conventional mortgage typically refers to loans retrieved from financial institutions with standard terms, rather than the informal arrangement established between a buyer and seller in a carry back situation.