Home Buying in Flint>Question Details

markesheap, Other/Just Looking in Flint, MI

Are banks willing to do land contracts?

Asked by markesheap, Flint, MI Mon Jan 30, 2012

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I leased/purchased a mortorhome from a couple. They had a loan from a bank on it an sid they wanted me to send the payment to the bank each month for the 72 month lease purchase. I called the bank they said if your not paying off the loan you can lease/purchase the property. I told the couple this and they said we won't tell the bank they don't need to know. Well now I want to payoff the lease/purchase and now the couple is saying I must payoff the entire L/P to do so even thought they owe less then the (I believe Illegal agreement)? to pay it off. I made 20 months of payments and now want to pay it off. The couple gave me a print out at the time of our agreement of the balance of the MHome at the time of sale. What legal right do I have on this illegal contract.
0 votes Thank Flag Link Tue Mar 11, 2014
sorry typo :THE BANK SAID I CAN'T LEASE /PURCHASE THE MOTORHOME BECAUSE THEY HAVE A CONTRACT ON IT.
Flag Tue Mar 11, 2014
Markesheap-

I now see where you are going. So I'll answer your question with question. If you loaned $250,000 to a friend to buy a home and they lost their job so they gave you the house, which is now worth $225,0000. You already live in the house of your dreams so you just want to sell the home. You have two potential buyers, choose one:

Buyer A: Credit Score 520, been employed for 9 months, 15% interest loan, really nice guy, has nothing to put down, but working on his credit, or

Buyer B: Credit Score 720, worked as a McDonald's Manager for 5 years,4.85% interest loan, kind of a mean man

Who most likely would you trust to follow through with a 30 year home loan to the end of the term?
Who would you invest (lend the money) to?

It's not personal. Banks, since the beginning of time, lend money for the purpose of making a profit, period. They look for the least amount of risk, even if they give up profit. If it is a foreclosure, they already have a bad risk owner, so they want to trade to a low risk owner. Not somebody who is working on their credit. I have a guy who does credit repair in Texas and he has a 100% success rate for those who enroll in his program. But of the people I refer, less than 25% actually enroll. Financial discipline is hard.

Your best bet is to rent a property, repair your credit, put 3 x your expected mortgage payment in a savings account, and stay at the same job for over 12 months. That money in the bank is your proof that you can live within your means and if you lose your job have something to fall back on at least for a short while.

I participate in a city sponsored program to help first time home buyers who are financially challenged. The city will give them enough money to pay their closing costs for a low cost loan that is forgivable after 5 years. Meaning, don't default on your home for 5 years and then the loan will become a gift. The trickiest part for them is to put the required 3 x estimated mortgage payment in the bank. I can hear Marta now, "People, if you can't pay it now you will certainly not be able to pay it in the future when you own the home. Learn to save." So, consider Marta's & my advice. It will be good for you in the long run.

Good Luck!

Cathy Bureau
Broker-Owner
Green Home Realty
0 votes Thank Flag Link Mon Jan 30, 2012
My strategy was to find a foreclosure that has been on the market for awhile and approach the bank about leasing it until my credit is repaired. I'm in the process of repairing it. I'm confident that it will be repaired within six months. I'm willing to arrange automatic payments or whatever is necessary to do so. Does this sound like a decent strategy?
0 votes Thank Flag Link Mon Jan 30, 2012
Mark,
I'm trying to understand what you want. What does a bank have to do with a rent to own or lease to buy (same difference)? Also, what you are asking about, the contract for deed, is not very consumer friendly. It's something sellers do if they can't find buyers with good credit, or investors do it seeking risky people. You see, you will have to put down some security, "down payment" and in that you will lose it if you bail on the house. I suggest that you rent and then put a special provision in the lease, a clause,that will allow you to terminate the lease and then purchase the home for a price agreed upon after the lease but before the termination, whatever fair market value is at that time.

You really do need to find a skilled Realtor because most Realtors just want to sell you a house and aren't really knowledgeable about clauses like that. It isn't' in a standard contract, its an addendum.

Good Luck!

Cathy Bureau
Broker-Owner
Green Home Realty
0 votes Thank Flag Link Mon Jan 30, 2012
Hi how are you today? They will handle a land contract for you to say they will hold the land contract take the payments for you make sure things are done on time. Will they do a do land contract no they deal with mortgages like FHA, VA, Raul Development. Hope this helps with your question if not let me know.

Thank you
Steve
0 votes Thank Flag Link Mon Jan 30, 2012
Mark,
I would not think so but your best bet is to ask the next time you go to the bank. It is not clear here what you are looking to do. Buy land or a home. I have to assume you want a home. There are many home owners willing to sell their propertes on a land contract. With that said, find an agent in your area that you feel comfortable working with and have the agent assist you with finding them.

God luck
0 votes Thank Flag Link Mon Jan 30, 2012
Thanks. I don't recall tying about a lay person, but if I did, it was a mistake. I'm guess that I'm looking for a lease with the option to buy.
0 votes Thank Flag Link Mon Jan 30, 2012
Was this an accidental duplicate? This was asked by our just a few hours ago. Here is what I posted and the question that was posted.

markesheap, Other/Just Looking in Flint, MI
Are banks willing to do land contracts?
Asked a few hours ago by markesheap - Home Buying in Flint - 12 answers
Cathy Bureau answered:
It depends on what you mean by land contract, and many other factors.

Land is the riskiest investment. For a bank to consider a loan you have to either be purchasing to build or be a developer these days, and even developers are having a difficult time. If the lot is improved and within a subdivision you'll have much better luck.

My buddy Ron is right about "Land Contract or "Contract for Deed but being a lay person I don't know that is what you intended to mean. But , just for fun, I'll give you the definition via Wikipedia.

A 'land contract' (sometimes known as a “contract for deed” or an “installment sale agreement”) is a contract between a seller and buyer of real property in which the seller provides financing to buy the property for an agreed-upon purchase price and the buyer repays the loan in installments. Under a land contract, the seller retains the legal title to the property, while permitting the buyer to take possession of it for most purposes other than legal ownership. The sale price is typically paid in periodic installments, often with a balloon payment at the end to make the timelength of payments shorter than a corresponding fully amortized loan without a final balloon payment. When the full purchase price has been paid including any interest, the seller is obligated to convey legal title to the property to the buyer. An initial down payment from the buyer to the seller is usually also required by a land contract. The legal status of land contracts varies from region to region.

Since a land contract specifies the sale of a specific item of real estate between a seller and buyer, a land contract can be considered a special type of real estate contract. In the usual, more conventional real estate contracts, a seller does not provide a loan to the buyer; the contract either does not specify a loan or includes provisions for a loan from a different "third party" lender, usually a financial institution in practice. When third party lenders are involved, typically a lien called a mortgage or trust deed is placed on the property so that the value of the property is used as collateral until the loan is paid in full.

Good Luck

Cathy Bureau
Broker-Owner
Green Home Realty - A few hours ago
0 votes Thank Flag Link Mon Jan 30, 2012
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