Numerous people have always dreamed of owning their own home, but for reasons such as not being able to qualify for a mortgage, problem credit, divorce, no credit history, poor credit history, and other reasons they feel as though they will never be able to experience the dream of owning a home. Because of recent credit tightening, some home buyers are less likely to qualify for mortgages. What can you do? One option could be to buy a home using a contract for deed.
A contract for deed is a transaction where the seller finances the sale of the property. The owner/seller of the property and a buyer enter into a contract in which the owner agrees to give the buyer a deed after the buyer pays the owner a certain amount of money. Usually the contract will stipulate that the buyer make payments over time with interest on the unpaid balance. When the buyer pays the total amount due under the terms of the contract, the owner gives a deed to the property to the buyer.
One of the advantages to the buyer is that they area able to save some money they would like to use for other things. This is because the closing costs and the down payment are usually less than required by a lender. For you first-time homebuyers out there, yes, you would be entitled to the first time home buyer tax credit as long as you can produce the HUD-1 statement as proof of the closing.
As with any contract involving a real estate transaction, you should seek competent advice as there are pros and cons to both the buyer and the seller when using a contract for deed purchase agreement. A contract for deed can be a very useful tool and has more flexibility than the mortgage regulations allow. It can be a great way to realize your dream of home ownership.
I currently have a few homes available for sale on a contract for deed. Feel free to check them out:
Eden Prairie: 9378 Libby Lane
St. Louis Park: 460 Ford Rd #403 & 460 Ford Rd #405
If you have questions about purchasing a home using contract for deed financing, give me a call or contact me.
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