Contract for Deed Detailed
Many individuals and families that come to Home Equity Parter to find their first home or condo often ask questions about what responsibilities and options they have. This is often because their perception of leasing is through the traditional model of renting an apartment, twinhome, or house. Most everyone has also heard about traditional bank loans and its benefits.
This is where a contract for deed can introduce a new solution iif you can’t get a traditional home loan through a bank near where you are currently renting.
While a lease-to-own option is similar to renting for most situations, a contract for deed is more like buying a home in the traditional way. The main difference is that you don’t have to qualify for a home loan, yet. With a contract for deed, the seller acts as the bank.
Additionally, with a contract for deed, you are often shown on county records which indicates a sale of the home. This means you have equitable interest in the property, can make improvements, and are responsible for repairs and upgrades. You’re essentially acting as the homeowner with financing from the seller.
We recommend that if you choose to enter a contract for deed that you also keep working with a bank and setting up a plan to get that loan so that eventually you can refinance (if the interest rate is better)..
One key factor that makes a contract for deed comparable to a home loan is the down payment requirements. A contract for deed through Home Equity Partner requires between 5-20% down depending on your situation and plan. This is close to industry average of 3.5-25% down.
While a contract for deed may look similar to a bank loan, it is often used by families who have run into issues with credit scores, job history, or other factors that denied them from getting a home loan. This is also where Home Equity Partner can help! To estimate your pre-approval price check out our calcualtor
Contract for deeds are less common than traditional mortgages so they work for different people and come with a lot of pros and cons. We can help you find what works right for your situation based on credit score, down payment, and future plans.
Contract for deed properties near you can be found on online or by referrals. Listen to this podcast title ” https://www.buzzsprout.com/1544305/episodes/7618222) How to Find Contract for Deed Homes Near You”. If you already found a home you like you can work with Home Equity Partner to see what options you have and how we can help.
We generally recommend seeing what you can qualify for through Home Equity Partner before making a final decision on the home you want.
Key Factors for a Contract for Deed:
- Down Payment is 5-20%
- monthly payment price is based on an interest rate but payment is usually around 1% of the home purchase price.
- You “own” the home, act like a homeowner, and possible tax benefits
- 100% responsible for improvements or repairs
Learn more about the difference between a lease option and contract for deed here.