What are the pros and cons of land contracts

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People with bad credit can benefit from land contracts when it comes to buying a home. Land Contracts or Agreements for a Deed are formed through the sale of real estate. The buyer would give the seller a cash down payment and in turn, the Seller would act as the Bank and finance the balance of the purchase price. The interest rate and terms will have to be negotiated at the time of sale. Below are the pros and cons of land contracts when purchasing real estate.


Pros of a land contract include: First, if the buyer has bad credit, it gives them time to repair bad credit in order to finance the home. Second, it can give a buyer time to lower his/hers debt to income ratio. Finally, it can give the buyer more time to come up with the down payment they will need to get financed through more conventional methods.

Cons of a land contract include: The seller is dishonest and takes out a home equity loan on the property or decides to sell the house to another person. The seller becomes financially strapped and files for bankruptcy protection. The seller never owned the property (Make sure you check with the county recorders and/or auditors website to see whose name is actually on the deed.

We strongly recommend having the final paper work of the land contract to be notarized and filed with the county recorders office and check to see if there are any liens on the property to protect the buyer and to prevent any dishonesty from the seller. You can also ask the seller if they will write up a mortgage on the property for you if the property has no liens ,judgments or current mortgage on that particular piece of real estate. This way is much more safer than a land contract and you will have more rights in the long term.

If you are dealing with a Company that offers land contracts on the property they own, we recommend you check with the Better Business Bureau to see if they have any negative complaint against them and to check to see if they been in business for a while to prevent you from being caught up in a scam.

If the seller has a current mortgage on the house we recommend financing the property in your name with a lender within two years. If you have twenty percent equity at the time that you decide to finance the property in your name and you can show that you made your land contract installment payments on time, the lender would then probably require very little or zero down payment from you.

One reputable company in Ohio that offers land contracts on land and sometime homes is Bruner Land Company. They sell and finance recreational property in over 70 counties in Ohio, West Virginia, Kentucky and Tennessee. They will also finance a cabin for up to half of the price of the property up to a maximum of $20,000. Their land contract agreements require 10% down and then they will finance the balance for up to 30 years at 9.9% interest. To learn more about this company and the properties available from them, please visit their website at http://www.brunerland.com.

Disclaimer: The above information was written in good faith, but we can not guarantee accuracy or credit approval. If you feel there is a error in our information or would like to add a real estate or land company that handles land contracts, please email us at help@consumerbadcreditguide.com.