3 year land contract?

[Miknan]

I'm not discharged yet from ch 7 that includes my home but ive been looking around for a place to rent after the forclosure for my family of 5 and there is NOTHING out there. I've contacted some builders and some are willing to do a 3 year land contract at a reasonable interest rate if I have a fairly large down payment that I think I can get. My fear is even with doing a good job of rebuilding my credit I won't be able to get a loan after 3 years even though I'm elgible. I read another poster (tobee?) couldn't. Thoughts?

[tobee43]

a land contract would be, or you should be able to wrap around an existing mortgage, which the builders should help you get.

here's from one of my past post on a land contact. also, you can have them change it to five years. the one we did for my daughter is 5 years due to the banking climate. in the meantime, we have a friend who collects the payments applies them to the existing mortgage and is helping this couple be able to at some point assume the mortgage. http://www.bkforum.com/showthread.ph...land+contracts

"Land contracts were very popular in the late 1970s and early 1980s. Back then, installment sale contracts, sometimes called contracts for deed, offered more attractive financing terms over the higher rates and rigid qualification standards of institutional lenders.
Land contracts began to disappear when loan requirements softened and rates dropped below 8%. But they have not vanished all together and, in fact, tiptoed back into the market in 2006."

What is an Installment Sale Land Contract?

Land contracts or contracts for deed are a security agreement between a seller, called a Vendor, and a buyer, called a Vendee.

The Vendor agrees to sell a property by financing the purchase for the Vendee.

The Vendor retains legal title and the Vendee receives equitable title.

The owner-carried financing can include an existing mortgage balance or the property can be free and clear.

Upon payment in full, the Vendor hands the Vendee a deed to the property.
All-Inclusive (Wrap-Around) Land Contracts

Wrap-around contracts contain an existing mortgage.

The Vendee makes one payment to the Vendor.

Upon receipt of the payment, the Vendor pays the underlying lender's payment and keeps the rest.

If the existing mortgage has a lower interest rate than the rate on the contract, the Vendor earns extra interest on money that does not belong to the Vendor.
This is how it works.

1.Say the sales price is $100,000.
2.The Vendee puts down $10,000.
3.The Vendee agrees to make payments on $90,000, bearing interest at 6.5%, payable $567.
4.The existing underlying loan is $50,000, payable at 5% interest with a payment of $268.

The Vendor earns 6.5% interest on $40,000 of equity, PLUS 1.5% interest on the existing mortgage of $50,000 and pockets $299 a month."

i would GRAB it...what's the builder should work with you to help you get the mortgage through...that is the way it works many times.

best of luck!!

[Miknan]

Thanks Tobee, there's alot to digest for me since I don't know much about this stuff. I read your story and I'm glad it all worked out great for you. I wonder if your situation was a combination of hard work and diligence with a dash of luck of just finding the right situation. I'm just afraid the person I do the land contract with might go bankrupt themselves and I'd be screwed. I feel safer with a reputable builder but I know they aren't immune to some shady dealings. Another concern with a new build is that the prices are overpriced in the current market and I doubt there is a lot of room for negotiating a new house and the fact they know my situation. I'd like to rent if I could find something but my wife has her heart on a house. She is so so sick and I want to give her this. She has literally lost everything between the BK, her dream home, maybe her career, and worst of all her health. Life right now is so so hard...

[tobee43]

Thanks Tobee, there's a lot to digest for me since I don't know much about this stuff. I read your story and I'm glad it all worked out great for you. I wonder if your situation was a combination of hard work and diligence with a dash of luck of just finding the right situation. I'm just afraid the person I do the land contract with might go bankrupt themselves and I'd be screwed. I feel safer with a reputable builder but I know they aren't immune to some shady dealings. Another concern with a new build is that the prices are overpriced in the current market and I doubt there is a lot of room for negotiating a new house and the fact they know my situation. I'd like to rent if I could find something but my wife has her heart on a house. She is so so sick and I want to give her this. She has literally lost everything between the BK, her dream home, maybe her career, and worst of all her health. Life right now is so so hard...

ahhhhhhhhhh.....i'm so sorry Miknon, and really i so understand what you're going through. we lost our home after 33 years, our jobs we had forever and also were socked with over 200k worth of medical bills when we filed. so my heart really goes out to you.

and, i want to tell you it's going to all be OK. but it's going to be a hard climb up and take all your strength and will, but, you can do this.

it took all of what you mentioned, diligence, hard work, time, tears, fears and a bit of luck and wheeling and dealing to get this house. but we did it.

a land contract is a good way to get in. i hear you about the prices being a bit high, but i'm working with someone right today, as a matter of fact, a young guy needing a hand, trying to buy a house from a builder and we are putting in an offer 10k less than asking...plus asking for the closing costs and a few free things while we were at it. ( we worked on it most of the early afternoon today). the builders can't sell, so many are willing to work with you, if not...we are off to the next sub division to see what we can find.

don't give up or in. never will it hurt to ask, the worse is that the answer is NO and for every one of those NO's, one comes closer to a yes.

hold on!! keep looking if you don't feel comfortable with this deal, another will come along promise!