PROS - a buyer may be able to, "purchase," a property that would otherwise not be possible through the conventional channels, as that buyer is likely not able to get approved for a mortgage

CONS - buyer will likely pay a higher interest rate; buyer may pay more for the property than they otherwise would; buyer may not be able to secure financing or an appraisal for the required amount once the land contract terms mature; seller's lender, if there is one, may not waive the due-on-sale clause.

Although it appears there are more negatives than not, it can be a good scenario for someone that otherwise couldn't get a home, and for a Seller who is having a hard time selling a home.

Purchasing your home on a land contract is helpful if you have poor credit and cannot obtain a mortgage. However, you don't own the home or the land right away ( depending on your contract usually between 2-7 yrs in our area), you usually have to put at least 20% down and you will have a large balloon payment at the end of your contract.
As a seller, there are many benefits. In order to sell on land contract, you cannot have a mortgage on the property, therefore the payments plus interest that are made to you every month are straight profit. You receive a large down payment and a final balloon payment.

By land contract are you referring to a land lease contract? Either you are renting the land and owning the home? Which you will see in something such as a 55+ community?


Sean Dawes