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 debt to income ration
lowered. Finally, it can give the buyer more time to come up with the down payment they will need to get financed.
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.
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 to prevent any dishonesty from the seller. applications.
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 the lender would then probably require very little or zero down payment from you.