Be very, very cautious about entering into a contract for deed....I am quite sure most industry professionals each have at least one horror story for either a buyer or seller on a contract for deed scenario. Certainly, involve an attorney or a real estate broker. Set it up for success for all concerned, from the onset. The pitfalls are far to numerous to lay out on an advice forum; however, if you want some general guidance you can contact me via my profile. Best to you!
It's all negotiable. All other things being equal, it would be somewhat above the current mortgage rate--very roughly, maybe between 5.5% and 8%. But it depends, as Cornerstone noted, on the length of the contract and other factors. Frankly, it also depends on your motivation. Can you get conventional financing at 4%? Then, if the contract for deed is above that amount, then just go with conventional financing. On the other hand, if you've got really weak credit, then expect to pay a higher rate.
Hope that helps.
If you do engage in a wraparound mortgage there are some things you can do to protect yourself from being in the situation where the underlying note isn't being paid but you need to have an attorney involved in these transactions.
Best of luck to you and yell if you have any other questions.
Kelly Gebler, Principal Broker
Cornerstone Group NW @ Keller Williams Realty
The interest rate you receive on your reverse mortgage loan will be to most important factor in determine how much you will be able to borrow/receive today and how much will build up over the course of the loan. Just as with a forward mortgage (think of a refinance) where you would want to secure a low fixed rate this is the same concept with the reverse mortgage.To know more search