land installment contract - Posted by Michelle Woodland

Posted by Michelle Woodland on May 21, 1999 at 09:29:58:

Yes, I will qualify for 75-80 in about 4-6 months.

land installment contract - Posted by Michelle Woodland

Posted by Michelle Woodland on May 20, 1999 at 09:27:52:

What is the difference between a land installment contract and a lease with purchase option contract? It was recommeded that I use a land installment contract to purchase the home I am currently renting. A mortgage refinance company suggested it. Thanks.

Land Contract vs Lease Option - Posted by Jim Kennedy

Posted by Jim Kennedy on May 20, 1999 at 11:53:53:

Michelle,

Someone asked this same question within the last week or so. I don?t see it on this news group anymore so it has probably been sent to the archives. Normally, someone could direct you to look for your answer in the archives, but unfortunately the archives are not working right now, so I?ll reprint a part of my answer.

A land contract is an installment selling arrangement where the buyer gets to use/occupy the property but does not receive a deed until the terms of the contract are fulfilled. Since the seller does not give the buyer a deed, legal title does not pass to the buyer; however, the buyer does have EQUITABLE title during the term of the contract. As Bill Gatten described it, a land contract is a Lay-Away Plan for real estate.

A land contract is called by different names depending upon the area of the country you?re in, but basically the concept is the same. It can be called a land contract, installment contract, installment land contract, conditional sales contract, contract for deed, or bond for deed. The laws governing land contracts (or whatever it is called in your area) vary from state to state.

A lease-option, on the other hand, is a lease under which the lessee (tenant/buyer) has the right, but not the obligation, to purchase the property. A lease-option can be a single document that spells out the terms of the lease as well as the terms of the option to purchase. Many knowledgeable real estate investors suggest using two separate documents ? 1. A lease document, and 2. An option or sales document ? so that if a default occurs the lessor (landlord/owner) can evict the lessee under the terms of the lease in hopes of avoiding the complications that might arise if the tenant claims an equitable title under the terms of the option. Once the search capability is restored, you can review some in-depth discussions about the pros and cons and varying opinions expressed in the archives.

Why is the mortgage company suggesting that you use an installment land contract? Land contracts are frequently used when the buyer can not qualify for financing or does not have sufficient funds for a down payment. Because there are some distinct disadvantages to the buyer using a land contract, there may be a much better way for you to acquire the property you are currently renting or another equally acceptable property. If you would be willing to post the details of the transaction, we may be able to suggest some alternatives that would be to your advantage.

Best of Success!!

Jim Kennedy,
Houston, TX

Re: Land Contract vs Lease Option - Posted by Michelle Woodland

Posted by Michelle Woodland on May 20, 1999 at 14:01:46:

Yes, Jim, you are right. At the present time I do not qualify for a conventional mortgage. My credit is not very good at the present time. The house that I occupy has been rented by me for the past 17 months. The owner is an elderly gentleman who wants to sell the property. There is an existing mortgage that is only about 3 or 4 years old. The owner contacted a mortgaging refinancing company and they suggested the land installment contract. I was informed by them that in about 6 months I should qualify for a loan because several debts will be paid off by then. This transaction is being treated as a refinance so that neither I nor the seller would have to pay out of pocket expenses. You see, it’s a nice house, the owner wants to sell and I need to find a way to purchase! Thanks so very much for your informative reply and feel free to forward any more information that you think will help.

Michelle

Re: Land Contract vs Lease Option - Posted by David Alexander

Posted by David Alexander on May 20, 1999 at 14:21:55:

Give us more Info still, Have you found out about the Underlying Loan, if there is one. Maybe you could assume it in a trust, and the owner carry a second until you refi. Give us some numbers too. We’re only able to feed off the little bits of info, show us the whole picture.

David Alexander

Re: Land Contract vs Lease Option - Posted by Michelle Woodland

Posted by Michelle Woodland on May 20, 1999 at 15:38:12:

This is the story. I don’t have good credit at this time. I almost had a loan except there are a few debts that need to be paid off before I qualify. This will take place in about 6 months or less. The house has been rented by me for the past 17 months with option to purchase. The owner is ready to sell. He (the owner) contacted a mortgage refinance company who was going to treat the loan as a refinance by me to pay off the existing mortgage ($95K) and give the seller the balance as profit (approx 20K) with neither the seller or myself having to spend out of pocket money. The problem is I need to clear up a few things before I can get the loan and even so I may not qualify for the entire amount. The mortgage company suggested I use a land installment contract. If you know of another way I might proceed to purchase this property, please let me know. I hope I’ve provided enough details. If not, let me know. Thanks!

Re: Land Contract vs Lease Option - Posted by David Alexander

Posted by David Alexander on May 20, 1999 at 18:14:25:

How much can you qualify for? Can you qualify for 75-80, that’s what I would do if I was going to take out a mortgage. You would then have the seller carry back a second for the remaining.

David Alexander