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.
What is a Land Contract?
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.
Related: Everything you need to know about owner financing in Florida
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.
Related: USDA programs to help veterans buy a farm
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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