Seller Financing | Land Contracts | Deeds of Contracts
What is a Land Contract? A Land Contract also known as "Contract for Deed" or "Seller Financing" is a loan through the seller you are buying the real estate/property from instead of getting a conventional bank loan or having a mortgage through a financial institution. The seller holds the title or deed and gives buyer equitable title until the contract is fully satisfied by the buyer. Then buyer will get full ownership to the property. Just like a bank loan, a land contract normally has a down payment, interest rate (commonly higher than banks interest rates), over the length of the contract. The loan can be fully satisfied at the end of the contract or a lump sum is due called a balloon payment. Buyers sometime get bank financing to pay off the balloon payment to the seller. A land contract is not just for vacant land, but can be used when buying a home, condominium, commercial property, farm land etc... Please note that each seller is different and most likely will negoicate on 3 main factors regarding the Land Contract. Downpayment, Interest Rate and the Length of the contract itself. ALSO WHAT IS AN ACRE!
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This is only a general description of a Contract for Deed. Each state has different rules/guidelines for seller financing. Land contracts are used for a variety of reason's including poor credit, not enough of a down payment or they can't meet the conventional mortgage loan requirements. Many owners will not do seller financing because they consider it a higher risk, but it could give them a steady monthly income.
"Buyer, Vendee, Contract Purchaser all mean the same thing and is the same for Seller & Vendor."
Definitions: From Wikipedia.org
Land Contract: A land contract (sometimes known as a “contract for deed” or an “installment sale agreement”) is a contract between a seller and buyer of real property in which the seller provides financing to buy the property for an agreed-upon purchase price and the buyer repays the loan in installments. Under a land contract, the seller retains the legal title to the property, while permitting the buyer to take possession of it for most purposes other than legal ownership. The sale price is typically paid in periodic installments, often with a balloon payment at the end to… http://en.wikipedia.org/wiki/Land_contract
Balloon Payment: The phrase balloon payment or bullet payment refers to one of two ways for repaying a loan; the other type is called amortizing payment or Amortization (business)… http://en.wikipedia.org/wiki/Balloon_payment: Is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower… http://en.wikipedia.org/wiki/Loan
Monthly Payment: Money given to a lender in repayment of a loan on a monthly basis.
Liens: In law, a lien is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation. The owner of the property, who grants the lien, is referred to as the lienor and the person who has the benefit of the lien is referred to as the lienee… http://en.wikipedia.org/wiki/Liens
Property Tax: Property tax, or millage tax, is an ad valorem tax that an owner is required to pay on the value of the property being taxed. Property tax can be defined as "general, tax imposed by municipalities upon owners of property within their jurisdiction based on the value of such property… http://en.wikipedia.org/wiki/Property_tax
Lender / Mortgage Company / Mortgage: Mortgage is the transfer of an interest in property (or the equivalent in law - a charge) to a lender as a security for a debt - usually a loan of money. While a mortgage in itself is not a debt, it is the lender's security for a debt…. http://en.wikipedia.org/wiki/Mortage
Please note that this is just general information about Land Contracts please consult a lawyer.