Seller/Owner Financing Question

[Manuel Sandoval]

Hi,

Recently I have become very interested in apartment investing, so I have doing a lot of research.

I started reading about seller/owner financing, and I'm confused about something. Buyers usually go through this option when they cannot get a loan through conventional means, such as from a bank. I understand that in seller financing, the seller takes the role of the bank, the agreement is usually around 5-6 years, and at the end of those 5-6 years, the buyers has to provide a balloon payment, which the buyer usually pays or refinances with a traditional third party lender who pays it. This is where I seem to not understand something:

How is the buyer able to refinance for the balloon payment with a third party (I'm assuming it's the bank) if the reason he is under seller financing is because he was not able to get a loan through the bank in the first place? Why would the bank agree to refinance now? Is there a possibility that the buyer cannot refinance?

I am a college student and I'm using this summer vacation to try to understand how all this works :D. If you have any other advice for me, I would truly be thankful for it.

Thank you all,

Manuel