If you can't find a bank to approve your home loan, ask the seller to consider being your mortgage lender.

Only a fraction of sellers are willing to take on the role of financier, but that fraction is likely larger than it was a few years ago when lenders had plenty money to lend.

That's because today's home buyers are having a tough time finding mortgage money and sellers are having a tough time finding buyers.

Seller financing isn't an option for every transaction, but it can be a win-win situation for those who can strike a deal, says Greg Winfield, who runs the web listing service OwnerWillCarry.com.

Winfield says seller financed mortgages can come in a variety of formats with all terms negotiable between the buyer and seller.

The best seller-financing comes with properties that are mortgage free and clear. The seller simply accepts a note -- a legally binding loan contract -- from a qualifying buyer.

Such a seller, who finds a qualified buyer, likely can move the home faster than waiting for the current hard money market to yield an approved buyer.

If the seller offers relaxed terms and other incentives, he or she can get a fair price for the home, a higher investment return than other investments, tax breaks due to reporting the sale as installment payments, monthly income, and a shorter listing term.

Benefits to buyers typically include less stringent qualifying, down payment requirements and flexible, tailored rates, closing costs and loan terms and rates.

Elizabeth Weintraub, with Lyon Real Estate's downtown Sacramento office, says because buyers and sellers aren't waiting for a lender to process the loan, closing is faster.

Weintraub says the deal gets more complicated when there's an outstanding mortgage, a fixer-upper home, lease option or land contract involved.

Whatever flavor seller-financing you choose, you will also need a real estate attorney or other seller-financing proficient professional to draw up the papers.

Weintraub says the types of owner financing include:

• Land contracts don't pass title to the buyer, but gives the buyer what's called "equitable title," a sort of temporarily shared ownership. The buyer makes payments to the seller for a term and after the final payment or payoff, the buyer gets the deed.

• Promissory Notes and mortgages are carried by the seller for the entire balance. Also called an "all-inclusive mortgage" or "all-inclusive trust deed" (AITD).

• The seller can carry a junior mortgage, the buyer receives the deed, but gives the seller a second mortgage for the balance of the purchase price, less the down payment and first mortgage amount.

• Lease purchase or lease option. The seller gives the buyer equitable title and leases the property to the buyer for a contracted term. When the buyer fulfills the lease purchase agreement, the buyer receives title and typically obtains a loan to pay the seller. Some or all of the rental payments are a credit against the purchase price. Numerous variations exist.

Published: March 25, 2008

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Broderick Perkins parlayed a 30-year career in old-school journalism into a digital-age news service offering editorial content and related consulting services. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based content provider specializing in residential real estate, consumer news and consulting. An open house for news that really hits home, the DeadlineNews Group includes the umbrella website DeadlineNews.com the flagship blog Deadline Newsroom, and three Examiner.com outposts -- Real Estate News Examiner; Consumer News Examiner; and Offbeat News Examiner. Along with a decade of work here with Realty Times, Perkins also provides content for Silicon Valley based ERate.com and the new AOLNews.com, where now "You've got news....that really hits home." His current work can also be found in Californian publications, the San Jose Mercury News, San Francisco's The Registry and the Salinas Californian. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News, before launching DeadlineNews Group. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Nolo.com among more than four dozen publications. In addition to managing the DeadlineNews Group, Perkins served as chief editorial consultant for "Nolo's Essential Guide To Buying Your First Home."