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.
Patty Clark Helping Families Move with Care Broker/Owner Morningside Homes Realtor Emeritus Certified Residential Specialists Certified Master of Real Estate Graduate of the Real Estate Institute Women’s Council of Realtors Certified Negotiations Expert Certifed Short Sales and Foreclosure Resource Certified Stager Doing business since 1979 Past Board of Directors for Aurora Association of Realtors Cell: 720-231-5200
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"Patty is the greatest! As a first time seller, I needed a lot of guidance and some hand-holding and she was there every step of the way. My house was on the market, sold, and I was in my new home in less than 60 days! Patty is personable, professional, highly knowledgeable, and very trustworthy. It was a pleasure working with her!"
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