Many buyers feel that now is a good time to buy real estate. Buyers can now bargain hard with sellers over the price and terms of a contract. But mortgage loans are even harder to get.
If you would like to buy a house or condominium and can afford the monthly payments but haven't saved the money for a down payment there are creative options available to help you buy your house.
-Seller financing is one option. With a terrible real estate market sellers may gladly help finance the sale of their home. A buyer may get a fixed rate loan at a lower interest rate than from a conventional lender saving the expense of loan points and the seller gets cash and a return on equity exceeding the interest being paid by money market funds.
-A land contract sale requiring a small downpayment is a helpful form of seller financing. The seller retains title to the property and agrees to convey title only when the buyer pays the balance of the price at the balloon payment.
Land contracts can be risky to the buyer because if a buyer misses a payment the seller can give the buyer a 30 days' notice and file a lawsuit to regain possession of the real estate. Under Illinois law, however, contract buyers have legal remedies to cure their defaults and reinstate their contract rights.
The seller, by carrying the financing, benefits because the loan to the purchaser can yield more than a certificate of deposit or a money market account. The seller's loan is secured because the building is collateral for the loan and the seller can foreclose (regain ownership of the real estate) if the purchasers default in the monthly payments.
-Lease a home with option to purchase. If you buy a house for $250,000 you could rent the house for $2,000 per month and move into the house for two months rent (security deposit and non-refundable option fee). Each month a portion of the monthly rent could be applied to the downpayment.
Remember that for all real estate transactions the real estate contract is the single most important document as it defines the entire legal relationship between the seller and purchaser. Merely because the contract is preprinted doesn't mean that the terms are standard or apply to your situation.