Owner funding can be an alternative that is attractive old-fashioned loan providers, and perhaps could be better to get. Needless to say, in this situation financing is totally kept towards the discretion regarding the land owner, so that you should be ready to negotiate a deal that is favorable. Nevertheless, if you’ve been rejected by the bank or credit union, owner funding can be your next option that is best.
In terms of land that is buying there’s two fundamental types of owner funding – ‘contract for deed’ and ‘mortgage/trust deed’. Each has its own benefits and drawbacks for both customer and vendor.
- Contract for Deed – often known as a ‘land installment contract’, this enables the customer to pay for the land owner in installments more than a period that is predetermined of. Typically, there is certainly a last balloon repayment that further compensates the seller for funding the purchase. The upside of agreement for deed funding is it is better to get, especially if you have dismal credit ratings or sub-standard credit records.