The note holder collects the remaining payments due on his note from the treasury bond coupons.6.

This is how bank originated debt works in the apartment scenario you describe: The lender collects their origination fees and debt service payments are then collected priorty every month until the loan is paid off.  

From then on, I make the payments and I own the house.

One offered asking price with a $20,000 down payment and atleast a 3 year balloon.I really need to get this house sold.

I liked the large down payment I got up front but the property never cash flowed.

Who ever is doing your title work is the person who you send the down payment, origination, and lender fees to.

Would I be able to take out a loan, let it sit in my personal savings account for at least 60 days and be able to use that as a down payment on a house?

We're trying to decide if we should rent or sell.If we sell, we are looking to get most of our money back that we put in (down payment, small updates like paint and appliance purchases).

Coops in NYC will require 2 years maintenance and mortgage payments to be available post-closing. 

The issue is, based on her credit report and other known info, I added all the expenses: (car payment $722, debt obligation/month $1900, rent, renters insurance, utilities, estimated grocery, living necessities, her total **essential** expenses would be at least $800 greater than her net income.