An alternative to a non-conforming loan is the use of a land contract, which is allowed in some states. A land contract is an agreement between a buyer and a seller, where the buyer agrees to make periodic payments to the seller. The title to the property only transfers to the land contract buyer on fulfillment of the land contract obligations.
A land contract can be helpful for those who need time to establish or improve their credit rating. There are only small closing costs, and payment can help establish a good mortgage payment record. This can help establish an overall good credit rating, and it is possible for the buyer to later refinance the land contract with a conforming loan.
On the other hand, there are risks associated with land contracts. Land contract purchases are not necessarily recorded in the public record, and there are no guarantees that the seller will be able to transfer a clear title to the buyer upon fulfillment of the land contract. There also is no lender assuring that the purchase price for the property is justified, and no inspection of the property’s condition.
Another alternative to a non-conforming loan is assuming the seller’s mortgage. By assuming a mortgage, if the mortgage is assumable, it is possible to save on closing costs, and may allow you to obtain a favorable interest rate.
Jay Pearl Elevate 317 Realty 430 N Park Ave, #503 Indianapolis, IN 46202 Direct: 317.502.6385
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Jay is a very knowledgeable, hardworking, kind man! He has provided service for over 10 years for my husband and I. He has sold homes and managed rentals for us. An honest giving man. He helped us rent our properties and solve maintenance problems and renter problems.Jamie Goulding
Working with Jay as our listing agent has not only been beneficial, but a necessary part of our company. Jay works nonstop to ensure our properties are well marketed, well connected and actively seeks buyers. His attention to detail and ability to work so closely with his clients makes him a great choice for us and I wouldn't hesitate at all to recommend him.Joe Smoker