Want to purchase a house but do not have the credit history to obtain a mortgage? Possibly a "Land Contract" is the way to purchase a house. With a "Land Contract" the seller functions as the "Bank". You will still need a down payment and will have monthly house payments and escrow payements for taxes and insurance. Due to the added risk to the seller for this type of purchase, the annual interest rate may be a little higher than if financed at a bank. Many sellers who offer the "Land Contract" option will not want to hold the land contract for a long period of time. They will hold the land contract for 2-5 years giving the buyers the chance to improve their credit history so they are able to obtain bank financing for the remainder of the mortgage.
House sells for $80,000 with a "Land Contract" option.
Terms of the land contract: 10% Down - $8,000
7.0% Interest rate w/20 year ammoritization = $558.22/month
Plus 1/12 of the annual property tax and house insurance premium
At the end of the 2-5 year "Land Contract" term, the buyer obtains bank financing or other financing to pay off the land contract.
A "Land Contract" qualifies for the Home Buyer's tax credit.
If you would like to explore this possibility, contact me for more details:
SFR, e-PRO, ABR, SRES, MDI, EcoBroker
Cell - 616-299-2771
Office Phone/Fax - 616-796-9784