Learn how you can achieve homeownership without getting a traditional mortgage if you buy a home on contract.
One way to achieve homeownership without going through a bank is to buy a home on contract. Essentially, you are buying the home directly from the owner. With this type of arrangement, the you gain ownership of the property and assume the standard maintenance and insurance obligations. When you make the final payment, the seller transfers the title to you.
Buying a home on contract is fairly simple. The first step involves getting a legal land contract between you and the seller. This contract includes a description of the property, the amount of the sale, the required down payment, if applicable, and interest rate. The contract will also specify the monthly payment amount and the date of any balloon payment is due.
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As with any home sale, you have the right to get the propery inspected before you buy. It is a good idea to invest the $300-500 that a home inspection typically costs.
Once you and the seller agree to the contract, you need to obtain an owner's title insurance policy. A title agency can help you get this policy. This policy ensures the title transfer when you've made all the payments. You should also have the title clerk check the property deed to ensure it is clear of liens.
Now you both sign the contract and have it notarized. The contract will be filed at your local county recorder's office. If you default on the contract, the seller can evict you and keep all the previous payments without legal liability.
Usually, when you are shopping real estate listings, you will see homes advertised with "owner financing available." This indicates that the owner is willing to sell the home on contract. For free property listings in your area, go to Reply! now.