A land contract is a real estate purchase whereby the seller remains in possession of the land title deed until the buyer finishes making payments of the agreed asking price. It is vital to know that signing a land contract is not the same as taking a mortgage.
Instead, you can use a land contract as a financing tool when looking to buy Texas land for sale. Below is a summary of everything you should know when it comes to land contracts while buying land in Texas.
When You Should Use a Land Contract
There are several situations you should use a land contract when buying Texas land for sale. For instance, if a property seller is handling the financing of the purchase, you should use a land contract. This means that the buyer will be making installments at an agreed rate to pay back the loan.
Here are other situations when a land contract is recommended.
● When the buyer has a sporadic or mischievous employment history
● When a buyer has a poor and unreliable credit rating and cannot get financing from lenders.
How To Determine Payments With Land Contract
In a land contract, part of the monthly installment goes towards paying the interest owned. You should know the importance of this step when buying Texas land for sale. This payment method is almost similar to a typical mortgage process.
For the best results, you should consult mortgage brokers that are experienced in handling Texas land for sale. You can also contact financial institutions to find out the interest rates lenders are offering. This is crucial because it helps you calculate an ideal interest rate and determine the kind of payment that works for you.
Property Titles in Texas
In Texas, the time needed to transfer a property title is the difference between purchasing a real estate property and using a traditional mortgage. If you choose to work with a traditional mortgage loan, the buyer obtains the property title after completing the payment.
The mortgage company holds a property lien, giving the purchaser time to complete payment. Keep in mind that the payment must be completed within the agreed period to avoid penalties. Generally, a land contract is the most common type of land agreement in Texas.
Understand Land Contract for Safer Buying
You wouldn’t want to buy land in Texas without understanding the land contract. Take your time and go through the land contract agreement before purchasing land in Texas.