Buying a home on a contract for deed may have some down sides to it, but there are also a lot of advantages, especially if you have bad or no credit history. If you had some past financial issues, like foreclosure, bankruptcy or repos then you are probably not going to be qualified for a traditional home mortgage. You would have only a few options left if you want to buy a house. You could either do a lease option/rent to own, a contract for deed, or come up with some other way of creative financing.
Before you look at the advantages of buying on a contract for deed, you should make sure you are aware of all the disadvantages that come with it. We highly suggest that you find an experienced Realtor who can help you understand all the pros and cons buying a home on a contract for deed. In this article, we will focus on the advantages of it and will give you some general tips and ideas about what to expect from a typical CD transaction.
So what are some of the benefits and why should you buy a home on a contract for deed?
Ability to buy a home with bad or no credit! If you have poor credit history, no bank will lend you money so your only option is to work with owner financing. Buying a contract for deed home is a perfect alternative. You can become a proud home owner again! Let's face it - renting sucks! You can't paint the walls the color you like, you can't have pets, barbeques, bonfires, and some landlords simple drive a lot of people crazy. Start building equity! Instead of throwing money on rent, you can start building equity in your own house. There is almost no qualifying! You won't have to deal with lengthy applications, credit checks, and approvals. Although, some sellers will ask for some credit or rental history - don't be worried, they just want to get to know you a little bit more so they know what your financial situation is. Remember, they are also running a risk, kind of a common sense to do. It is a quick and easy closing! You literary can close within days on a contract for deed deal. As long as you get everybody in line, get your inspection done and give a day or two for the title company to do title searches - you are good! There aren't any lender fees at closing! When buying a home with a mortgage, you will have loan originator fees, service fees, application fees, etc. With a contract for deed you will have only title company fees and nothing else. Opportunity to repair credit! Instead of renting for long 5 years before you are eligible to buy a home again, you can buy a home now and continue working on your credit. Get tax benefits! Deduct your interest, property taxes, insurance premiums, etc. You can improve the property and customize it to your needs! As long as the seller is on board with you, go ahead and go nuts. Add porches, sun rooms, saunas, hot tubs and whatever else that floats your boat. Don't be restricted by your rental agreement like you would be when renting. It is your property - enjoy the ownership of it! Possible capital gains! If the markets improves and values go up - you make money! If you bought it when prices were low, and market starts improving, then in 5 years your property will be worth more than what you owe on it.
Here are some of our tips on what to be aware of when buying a house on a CD:
Be aware of scammers! Because there aren't that many parties involved in the transacion - there are less rules and regulaitons invloved which creates a perfect breeding ground for scammers who are out there. Make sure you are using a title company! Make sure there is no mortgage on the property, if there is - make sure there is no "Due on sale" clause Get legal advice needed! Make sure you will be able to refinance on or before the balloon payment is due! Check maximum allowed usury rates, don't over pay for ฝากขายคอนโด interest! Make sure you are working on improving your credit score! Don't sign any papers before signing! Do your homework, educate yourself so you fully understand what you are getting yourself into
These are just a few of the major advantages of buying a home on a CD. Make sure you are aware of disadvantages of contract for deed also and make sure you have a back up plan in case it doesn't work out. If you have to move fast, remember that buying a home can be a hassle, especially when it comes to contract for deed homes! There aren't that many of them out there so you have to always have plan B!
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