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.
Tim Tanz, CRS, GRI, ABR
1034 S Brentwood Blvd
St Louis, MO 63117
---We trusted Tim so well that we purchased a home through him simply by doing FaceTime with him at an open house. We lived in a different State and couldn't make it in time to a home that was having multiple offers and Tim made sure to put us first, thus guaranteeing our chance to make the successful bid that landed us our dream home! C. Haven -- 1201 Dunston Dr, Saint Louis, MO 63146
---We have purchased 2 homes and sold 1 home with Tim as our agent. If we have the opportunity to relocate back to the St. Louis area, our first call will be to Tim. When we purchased our first home through Tim, we didn't know anyone or very much about the St. Louis area. Tim took the time to show us many different areas which was very helpful in making our decision. He was very professional, detailed and walked us through the entire process. He made sure all the little details were taken care of. Tim has integrity and will tell you the truth about the market or about your home, even if you don't want to hear it. When we purchased and later sold our 2nd home, we didn't think twice about calling Tim. In my opinion, this one act put Tim way above the rest. During the sale of our last home, we had an issue with our moving company (basically they didn't show up the first day), so we had only one day to get our stuff out of the house and clean it up for the new owners. Tim came over and helped us with patching nail holes and cleaning. Not every agent would do that to help out their client. G. Allswede – 3476 Covington Parkway.