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Additional Information
Contract For Deed or CD
Contract for deed simply means that the Seller is financing the house for
the Buyer. The Buyer makes the house payments directly to the Seller.
Sometimes these are called land contracts or CD's.
Benefits to the Buyer:
· no credit check
· no application
· no origination fee (1-5% of loan)
· tax benefits (interest payments, depreciation)
· no appraisal
· fast closing
· not have to work with a bank!
· creativity
· Gets bundle of rights (Possession, control, quiet enjoyment, and
disposition).
Typical scenario: 10-20% down payment, 7-10% interest rate, the loan is
amortized over 30-years with a 5-year balloon payment. What is a balloon
payment? This means that the Seller wants a lump sum payment for the
entire remaining amount due. The Buyer typically refinances the house
with a traditional mortgage broker. Refinancing is easier for the Buyer to
obtain.
