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Contract For Deed: What You Need To Know?

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By : Roby Hicks    99 or more times read
Owning a home is a dream for everyone. But what happens if you have bad credit and you do not have enough to make the down payment? What happens if you do not qualify for any of the loan available? Would this mean the end of the dream for you? Fortunately, there is another option. You can find a seller who is willing to sell his home to you through a Contract for Deed. What is it and how will it work for you?

The Contract For Deed

A contract for deed is an arrangement between the seller and a buyer. The parties devise a document stating their agreed terms. the document will reveal the date of the first payment of the buyer. It will also present the schedules of the next payments for the property. However, the buyer will not get the title of the house unless full payment is made.

Here, the transaction takes place between the buyer and the seller. No third party is involved. Although the buyer can occupy the property right after making the down payment, no title will be handed to him yet.

Comparison with mortgage

In a mortgage loan, the borrower has to qualify first before he can start negotiating with the seller. Here, his credit is important as well as the down payment. If his mortgage loan application is not approved, he will not have the means to finance the property. Unlike the mortgage loan, the seller is more lenient about the credit score of his buyer. The down payment required is lower too. This what makes it ideal for many. However, if property is acquired through mortgage loan, the buyer will have the title to the property right after the down payment.

Benefits and risks

The credit for deed is beneficial because it is easy to own through this manner. The buyer will not have to qualify for a loan and the down payment is low. If managed better, this becomes a great way to own a property. However, this is very risky. If the buyer misses a payment, he could be evicted easily. Additionally, if the owner still has mortgage on the property and he defaults, the lender can evict the occupants and disclose the property even if the buyer his payments.

Although this can help make your dreams come true. This can also cause your nightmares, so you have to be careful. Bear in mind that you will not have the title of the property until you complete the payments. This means that you are not yet the legal owner of the property even if you are on time with your payments. To avoid this, check the legitimacy of the seller. Make sure that he has the authority to sell the house. You should also check the liens and other restrictions on the property. It might have been use as collateral for business loans. It may have been acquired through a mortgage. If the seller defaults, the lender will foreclose it and you would end up homeless.
Visit the Foreclosed Property in Chandler AZ and the Clement Ranch Subdivision Real Estate. Consider the Andersen Springs Community Real Estate as well.

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