I am concerned about buying (?) a home that is being offered owner finance when this property is owned by a third party who is financing it for the person wanting to sell it. Doesn't the first motgage need to be paid before he can offer owner finance to anyone?

It's probably a very big risk to buy it that way. There most likely is a "due on sale" clause on the loan and the lender can foreclose if it isn't paid off.

Check with a real estate attorney and have them review the documents. It should cost a few hundred dollars and save you thousands.