Owner funding is definitely an alternative that is attractive conventional loan providers, and perhaps might be better to get. Needless to say, in this scenario funding is totally kept to your discernment regarding the land owner, so that you should be ready to negotiate a good deal. Nevertheless, if you’ve been rejected by the bank or credit union, owner funding will be your next most suitable choice.
In terms of purchasing land, there are two main fundamental types of owner funding – ‘contract for deed’ and ‘mortgage/trust deed’. Each has its own benefits and disadvantages both for customer and vendor.
- Contract for Deed – often described as a ‘land installment contract’, this permits the customer to pay for the land owner in installments over a predetermined time frame. Typically, there was a last balloon repayment that further compensates the seller for funding the acquisition. The upside of agreement for deed funding is the fact that it is often better to get, specially for those who have dismal credit ratings or sub-standard credit histories. The drawback is that the vendor keeps the deed to your land under consideration, and only transfers it if the financial obligation is fully compensated. In the event that you, being a customer, are planning longterm this can be a fantastic solution. Continue reading