Complete private party financing only works when a seller owns his own home, without any mortgage liens. The details of private party mortgages are determined by the parties involved. However, these deals usually work similarly to traditional loans. At closing, the property title is transferred from the seller to the buyer. In return, the seller is given a promissory note for the total amount owed.
Each month, the buyer sends the seller a mortgage payment. Often, these payments are facilitated by a third-party note servicer (such as NoteWorld). If the buyer defaults on the loan, the seller may foreclose on the property.