Land Contract
I am trying to figure out the pros and cons of a land contract ( I believe this is also called "contract for deed"
as opposed to a regular old owner finance, both from the buyer's point of view as well as the seller's. I have not been able to pull up much literature on the fine points of such transactions. Any suggestions?
Thanks
Land Contract is basically owner financing. It is usually very flexible but in a lot of cases the property cannot be financed through regular lenders. In otherwords it may not be up to code etc.
The downside for the seller is that they get their money on month to month and there is usually a baloon at the end. Also , if buyer defaults they get property back. (not a bad deal if you ask me)
The upside is that they can sell non conforming properties at FMV and charge a higher interest rate.
The benefit for buyers is usually -little down, very lenient credit checks and after paying on time for few years, they may be in a better situation to get alternative financing.
Hope this helps,
Respecfully,
Barbann
Land contracts, are for people who want to get the most out of their investment. You still get the writeoffs for the house, you keep title in your name. I do many land contracts with people who don't don't need the money for the sale right away. The only draw back is when people think once they have a land contract the buyers can automatically get a mortgage in 12 or 24 months. I always make sure that the Land Contract Mortgage payment is reporting to all three credit bureaus. This way when the balloon payment becomes due. As long as the mtg is paid and reporting they can get a mortgage only program regardless of other credit. HOPE this HELPS!!!!
[addsig]
Tinman,
How do you go about reporting those payments to the big 3? Thanks
Jamesstreet
You write to them each, they will give you a form you fill it out and you have to report the status of the account monthly
[addsig]
Thank you all for your input!
Thanks