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Sunday, November 22, 2009



Glossary of Terms

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Land Contract

Real estate land contracts are deals made between the buyer and seller where the seller's mortgage remains in place and the buyer makes payments towards it instead of arranging a new mortgage loan upon "purchase." Land purchase contracts like these usually require the buyer to pay installments to a liaison who forwards the payments to the seller's mortgage. Complete ownership of the property and title transaction does not become official until all payments are made or until the buyer refinances the mortgage in his or her name. The dangerous part about land contracts is that such an agreement usually violates a lender policy; discovery of such transactions can empower your lender to demand full payment of the loan. The draw of land contracts and owner financing comes from the fact that the buyer is not able to qualify for a loan at the time of the deal. It is understood that within a certain amount of time the buyer will be able to obtain a new mortgage and pay off whatever amount the land contract requires.