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Posted by CENTURY 21 CUDDY on 1/26/2020

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With a mortgage, a buyer is applying for financing to purchase the property in its entirety. They're relying on their credit and assets for approval before assuming responsibility of the full property. In a land contract, you're cutting out the need for a formal lender and relying on the seller to approve or deny your application.

The seeming simplicity of the transaction may make some people discount the importance of negotiation. However, there are a few things to keep in mind so both the buyer and seller are comfortable with the terms of the agreement. 

Talk to the Seller 

With a land contract, you may be more beholden to the seller than you would be to a lender in a traditional mortgage. If the seller thinks of you as a tenant rather than an owner of the place, you'll need to discuss their exact involvement over the course of the contract.

Because the seller won't receive the full value of the property upon sale, their financial insecurity is entirely understandable. They may want to check up with you over the phone, in-person, or through a third-party. If you're uncomfortable with the level of oversight, you may need to speak up or find a different property. 

Make sure you understand your obligations during this time. Some buyers are treated as a renter of the property — until it comes time to make significant and costly repairs. If you're responsible for all upkeep, you may be able to negotiate more freedom in exchange for the additional expense. 

Think Through the Finances 

One of the starkest differences between a traditionally financed home and a land contract is the speed of repayments. Even if you do find a seller willing to extend the contract, it can still be a major strain on your finances. As you factor in your current assets and credit score, you should also consider the future.

If the final payment is large enough, it may still require a substantial loan. If your credit hasn't improved enough by the time the contract nears the end, it could be a significant blow to your savings. And if you can't meet the terms of the contract, the seller will get to keep the money you've already paid them (as well as the property). 

Negotiating a land contract means thinking through the repercussions of each clause. While the terms may seem looser than a standard mortgage, there may be strings attached that aren't as obvious at first glance. Ensure that you understand your financial and practical responsibilities before signing on the dotted line. 




Tags: loans   Financing   home loan   finance  
Categories: Mortgage  


Posted by CENTURY 21 CUDDY on 6/23/2019

Obtaining a home loan is a must for most homebuyers. However, there is a lot to think about to ensure a homebuyer can secure a loan that matches or exceeds his or her expectations.

Some of the key questions to consider about a home loan include:

1. What is a home loan's interest rate?

It is paramount to understand a home loan's interest rate, along with any associated loan fees. That way, a homebuyer will know exactly how much he or she will be paying over the life of a home loan.

If a homebuyer chooses a fixed-rate mortgage, he or she can lock in an interest rate for the duration of a home loan. This means a homebuyer will pay the same amount each month. And in many instances, a fixed-rate mortgage can be paid off early without penalty.

On the other hand, a homebuyer may prefer an adjustable-rate mortgage. With this type of mortgage, a homebuyer may receive a lower interest rate initially that rises after a set period of time.

Compare and contrast the different home loan options and their associated interest rates. By doing so, a homebuyer can make an informed home loan decision, one that serves him or her well both now and in the future.

2. Does a home loan require a minimum down payment?

Ask a lender about whether there is a minimum down payment required as part of a home loan agreement. Typically, a homebuyer will need to pay at least a small portion of a home's price to secure a home loan, and it certainly helps to have this information available before you start evaluating available residences.

In addition, it may be worthwhile to save as much money as possible prior to starting a home search. With money at your disposal, you may be better equipped than ever before to make a large down payment, thereby reducing the amount that you'll need for a home loan. Plus, you may even be able to boost your chances of getting a favorable home loan interest rate.

3. Will I need to provide legal documents to obtain a home loan?

Lenders will require you to provide proof of your income and assets, W-2 statements and other legal documents to finalize a home loan agreement. If you stay organized and have these documents readily available, you should have no trouble providing them to a lender as needed.

Overall, the home loan application process may vary from several weeks to many months. The time it takes to secure a home loan can be stressful, and if you need extra help along the way, it never hurts to reach out to a real estate agent.

With a real estate agent at your side, you can streamline the process of buying your dream home. This housing market professional can offer expert tips throughout the homebuying journey and ensure you can discover a great house at an affordable price.

Take the guesswork out of securing a home loan consider the aforementioned questions, and you can move one step closer to getting the financing you need to obtain your ideal residence.




Tags: Buying a home   loans  
Categories: Buying a Home   home loans  




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