Final answer:
Seller financing, also known as owner financing, is a real estate transaction where the seller provides the loan directly to the buyer. Escrow services may assist in managing payments for property taxes and homeowner's insurance. Third-party financing involves the government creating a special-purpose entity to borrow funds for large projects.
Step-by-step explanation:
The arrangement where a seller finances the sale of property and deeds it to the buyer at closing is known as seller financing or owner financing. Unlike traditional mortgage financing through a bank, seller financing involves the seller of the property providing the loan directly to the buyer, who then makes payments back to the seller over time. This method can be beneficial for buyers who may not qualify for traditional bank financing and for sellers who wish to move a property quickly.
Understanding the role of Escrow is also important in real estate transactions. Escrow is a financial arrangement where a third party holds and regulates payment of the funds required for two parties involved in a given transaction. It ensures that the buyer's monthly payments can cover not just the loan, but also property taxes and homeowner's insurance without the need to manage these expenses separately. Third-party financing is another concept, typically used by governments for large projects, and involves creating a special-purpose vehicle to finance the project through borrowing from private markets. This can be an inefficient and costly method according to entities like the Congressional Budget Office.