What is a Land Contract?

If you’re like many people looking for property for sale in North Florida, you’ve heard of land contracts before – but what are they, how do they work, and could one be right for you? This guide explains.

Just like the name implies, a land contract is a contract for the transfer of land. A land contract enables a seller to transfer a property to a buyer after agreeing to a certain set of terms. Land contracts are legal agreements, just like agreements borrowers enter with banks for loans.

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However, land contracts have some advantages for some people that traditional loans just don’t have. One of them is the fact that buyers don’t have to qualify with a credit score or down payment in the way that they would with the lender. In fact, they only have to meet the sellers requirements in order to participate in a land contract.

There may be disadvantages, too, though. Often, with a land contract, sellers require a balloon payment at the end. Most conventional loans don’t have that type of large payment.

Is a Land Contract the Same as a Land Loan?

Land contracts are not the same as land loans. Land loans are loans you take out from an established finance institution for the express purpose of buying land. Land contracts, on the other hand, our contracts you enter directly with the seller of a property.

What Can You Negotiate on a Land Contract?

You can negotiate nearly all the terms of a land contract. The most commonly negotiated items in a land contract include:

The property’s purchase price
Your down payment
The interest rate you’ll pay the seller
Your monthly payments
Your balloon payment
Whether there are prepayment penalties
What will happen if you default on your payments

Are You Buying a Home or Land for Sale in Lake City?

If you’re moving to Lake City, we can help you find the perfect place to live. Call us at 386-243-0124 to tell us what you want from your home and we will begin searching right away.

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$549,900

15585 184th St McAlpin, Florida

2 Beds 2 Baths 1,130 SqFt 41.81 Acres

What is a Land Contract?