MN Land Contract
MN contract for deeds are a great way to purchase a home with out obtaining a mortgage thru a lender-mortgage company credit union ect.
Alot of home buyers still cannot obtain a mortgage in todays strict mortgage market. Lenders have strict guidelines in giving an FHA-Conventional Mortgage so many buyers and sellers are entertaining the cd sale.
In contract for deed financing the seller provides financing for the buyer who makes payments monthly to the seller. CD contracts are usually between 3-5 years on average. Where a standard Mortgage is 15 or 30 years on average. The contract for deed payment is still based on a 30 year amortization schedule to keep the cd payments low for the buyer.
Seller financing is a great way for self employed-Low income-bad credit-No credit buyers buy a home.
Most banks wont deal with these clients. If a buyer has a foreclosure or short sale on their credit report they will to have wait 3 years to get an FHA mortgage. If the buyer wants to get a conventional mortgage the home buyer will have to wait for 5 years to get one of those.
With owner financing the buyer can save money by not paying FHA mortgage insurance while they have the contract for deed in place. The best option for the buyer is to gain 20% equity in the home so they can avoid the huge MIP monthy payments for the life of the loan. That is huge rip off the government keeps raising the premiums all the time.
Contract for deed is very helpful for buyers as stated above why would the buyer want to be a renter or rent to own-lease when they can buy the house and get tax bennefits - make the house thier own verses paying down someones elses mortgage?
BUYING A HOME CONTRACT FOR DEED CAN BE COMPLICATED
There is a lot of work put into contract for deed contracts. The buyer first has to find a home that the seller is willing to offer Owner financing. Then both parties have to agree on the terms-closing date-interest rate-purchase price-Buyers should always get a home inspection-title work completed by law office or title company. Having a Real Estate agent/Broker that is knowledgable in this field is very important. I cant stress that enough.
Contract for deed interest rates are generally higher than market rate. If you want to know what today's rates are you can call or email us. We can let you know what sellers are charging also what todays mortgage rates are. If the rates dont work for you we can always try and getting you a mortgage with a reputable lender. We have helped clients get a mortgage that thought they were out of luck. Also helped home buyers purchase properties on a cd.
What should I do when entertaining a land contract?
* Write and sign a purchase agreement.
* Home inspection.
* title work.
* Draft a legal contract for deed on approved contract for deed forms by commerce department.
* close on property- buyer has home insurance binder in place.
* change utilites in buyers name.
Buyer and sellers rights on the contract for deed
The buyer will make monthly installment payments to the seller. A C4D is not a rental agreement or a lease so the process is different you cant just evict them the cd buyer has rights. The contract for deed buyer does not have the same rights or protections as a buyer purchasing a mortgage thru a lender-mortgage company.
The contract for deed buyer must refinance the house-sell the home-or pay it off during the contract period. If the cd buyer does not perform on the contract the seller has the right to cancel the contract.
In Minnesota the seller can cancel the cd after 60 days of non payment or default of the cd. A mortgage can take up to a year in some cases.
Remember the balloon payment is part of the contract the buyer must perform under the contract terms.
There is usually an amount of repairs the cd buyer can do the house make sure you stay with in that price range also always get lien waivers from anyone who performs work to the property very important for your records.
There are some great contract for deed programs out there and there are also ones that are not.
2. Some cities have cd programs but the home values are not what I would pay for them. Just because someone fixes the home and offers it to you doesnt mean it is a great deal. Make sure you get a home that has market value that meets the purchase price.
3. Make sure you file for home stead status that can save you hundreds of dollars. Alot of time sellers move and offer their house for sale cd and homestead a new home or an investor buys and sells the property either of those usually means the home in non homestead and taxes will be higher.
4. Minnesota law requires the contract for deed to be recorded dont fall for the seller stating they will do it down the road. With out it being recorded they can resell the house to someone else. In MN whoom ever records the deed first is the home owner.
BOARDWALK PREMIER REALTY INC