Question: Is an owner "take-back" a good way to finance a home?

Answer: Such financing is fine as long as it meets the usual standards you would expect with a loan -- a competitive interest rate, no short-term balloon note, the right to prepay in whole or in part without penalty, a deed of trust rather than a "mortgage," (so there is a trustee to accept a pay-off in case the owner is not available), etc.

But, since a commercial lender is not involved, you will want many of the protections lenders require such as a title search, title insurance, termite inspection, survey, a proper deed, etc.