Land Contract
An alternative to a non-conforming loan is the use of a land contract, which is allowed in some states. A land contract is an agreement between a buyer and a seller, where the buyer agrees to make periodic payments to the seller. The title to the property only transfers to the land contract buyer on fulfillment of the land contract obligations.
A land contract can be helpful for those who need time to establish or improve their credit rating. There are only small closing costs, and payment can help establish a good mortgage payment record. This can help establish an overall good credit rating, and it is possible for the buyer to later refinance the land contract with a conforming loan.
On the other hand, there are risks associated with land contracts. Land contract purchases are not necessarily recorded in the public record, and there are no guarantees that the seller will be able to transfer a clear title to the buyer upon fulfillment of the land contract. There also is no lender assuring that the purchase price for the property is justified, and no inspection of the property’s condition.
Another alternative to a non-conforming loan is assuming the seller’s mortgage. By assuming a mortgage, if the mortgage is assumable, it is possible to save on closing costs and may allow you to obtain a favorable interest rate.
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Don’t go on a spending spree using credit if you are thinking about buying a home, or in the process of buying a new home.
The answer is simple: The purchase of a home is most likely one of the most expensive and important purchases you will ever make.
How would you like a mortgage payment of only 1.95%? You can have all that with the 11th District Cost of Funds (COFI) Adjustable Rate Mortgage.
Lenders are not in the business of selling real estate and will often try to accommodate property owners who are having payment problems.
With more than 20 years of experience in the greater Los Angeles Real Estate market, Larry Calemine has the experience and vision necessary to ensure the successful completion of your next Real Estate transaction. Larry’s vast knowledge of the current market and strong negotiation skills will assure anyone the best possible experience.
