[wcs40110]

Originally Posted by mostie

You know I just find out a bit ago that if an owner declares bankruptcy after selling a house on a land contract, that the house goes back to the bank regardless- scary thought! I wonder if the person who told me this meant CH 12 (or 11...I'm trying to remember which one is the one you pay back, and which is for farms, etc.) as opposed to CH 7, which just "disappears" everything...

I think they mean even if it's paid off. It's still 'equity'...

[mostie]

Originally Posted by jeli2657

A home owner really shouldn't be selling a house on land contract if they still have a mortgage on it. In fact, I wonder if they legally can at all.

Think about it. How can someone sell the collateral of their loan without violating the loan agreement?

Could you sell your car if you still owed the bank 10k?

Probably not, but there are so many unscrupulous people out there, you can never tell. I've heard horror stories about it, and I'm figuring that we'll probably just go with a conventional loan, the lesser of two evils I suppose, lol-

[mostie]

...when I think what we have paid in rent the last three years here in Omaha, it makes me ill to know that we could probably have bought a house in MI for just a bit more than what we've been paying in rent here!

[mike0618]

Do not do a land contract! They are sucker deals that leave seller with no responsiblies while buyer has no recourse if seller loses home to bank. Credit repair agencies can actually hurt your credit rating. Rent for a yr. contact a morgage company and find out exactly what you need to fix on your credit and then spend the yr doing just that.

[mostie]

Originally Posted by mike0618

Do not do a land contract! They are sucker deals that leave seller with no responsiblies while buyer has no recourse if seller loses home to bank. Credit repair agencies can actually hurt your credit rating. Rent for a yr. contact a morgage company and find out exactly what you need to fix on your credit and then spend the yr doing just that.

That's actually what we're doing right now- there are a few things to fix, but the more I look at land contracts, the more skittish I get- and I'm skittish enough about conventional loans- we hooked up with a place here in Omaha that is "helping" us fix our credit- and here is what I have found out about that....I have learned that if you get one of those "secured" credit cards, you should put very little on the card itself and pay it off each month. That's it, that's what I've learned- oh that and the fact that lack of revolving credit is what seems to be hurting us the most- well...in our eyes, credit has always hurt us simply because when you have it? You have a tendency to use it...even when it doesn't need to be used. But it upsets me (the credit repair place) in a way, because they charge us 60 a month (!)...and so far, any credit that has been repaired was due to me going over the report for all three agencies, and disputing things- I was also told by the credit repair place to call a few of the smaller bills and see if I could settle with them.

Wait a minute....

Why is it that I'm paying them, and doing the work myself???? I emailed and cancelled it today, lol. I've been talking to a bank in I.M., and she had me send our report- she told me that she could see what needs to be taken care of, let me know, and she's not charging me anything for it.

Niccccce. lol

[mostie]

Mike, just out of curiosity, how is it that a credit repair agency can hurt your credit?

[jackmichigan]

Buying on a Land Contract can be a good way to purchase property, but you need to do your due diligence and take appropriate precautions. People most often get into trouble by not verifying what liens are on the property. A Title Insurance Policy can assure you that the "owner" has the legal right to sell the property, that the taxes are paid up to date, and that there are no outstanding liens or mortgages against the property. Most bank loans have a "due on sale" clause which prohibits landowners from selling on a Land Contract, but some Sellers try to evade that restriction by keeping the sale secret--and that's when Purchasers can get into trouble.

Otherwise, Land Contracts are not that favorable to Sellers since they are at greater risk from bad Purchasers than the other way around. A word of caution, though: even though the OP states that they don't trust attorneys, I would recommend that you hire one to protect your interests if you ever contemplate a home purchase. Since you apparently have little experience purchasing property, you need to have someone on your side who does have experience and can help you avoid contractual pitfalls.

[mike0618]

Originally Posted by mostie

Mike, just out of curiosity, how is it that a credit repair agency can hurt your credit?

Most are scams and even the good ones tend to showup on your credit showing you are using them. I dont know what is worse a bankruptcy or them on your report.

[mike0618]

Fyi.. Guys the landlord who got in trouble in detroit for bad landcontracts is my uncle.. I know what i am talking about. Dont do them... Rent to own is better. If you do land contract you are responsible for repairs. Rent to own the owner has to fix things. Not much difference in the 2 than that.

[caspper69]

Originally Posted by jackmichigan

Buying on a Land Contract can be a good way to purchase property, but you need to do your due diligence and take appropriate precautions. People most often get into trouble by not verifying what liens are on the property. A Title Insurance Policy can assure you that the "owner" has the legal right to sell the property, that the taxes are paid up to date, and that there are no outstanding liens or mortgages against the property. Most bank loans have a "due on sale" clause which prohibits landowners from selling on a Land Contract, but some Sellers try to evade that restriction by keeping the sale secret--and that's when Purchasers can get into trouble.

Otherwise, Land Contracts are not that favorable to Sellers since they are at greater risk from bad Purchasers than the other way around. A word of caution, though: even though the OP states that they don't trust attorneys, I would recommend that you hire one to protect your interests if you ever contemplate a home purchase. Since you apparently have little experience purchasing property, you need to have someone on your side who does have experience and can help you avoid contractual pitfalls.

You are correct about due diligence.

Do NOT purchase a home on a land contract that is encumbered by a lien or mortgage. Most "commercially available" mortgages have a Due on Sale clause, and a Land Contract IS A SALE. When you enter into a land contract, YOU are now the owner of the property, responsible for all taxes, assessments, upkeep, maintenance, etc.

A land contract is essentially "Seller Financing." So you need to verify that there are no encumbrances on the property, as MI is a race-recording state. That means that whoever files a lien or notice or transfer on a property first (time-wise) gets priority. So if no one is "ahead" of you, you can only lose the house if you fail to pay and the Land Contract holder forecloses.

And Land Contracts can be good for a seller too. If he doesn't *need* the money, it can be a great way to earn 7 or 8% interest on your money (better than a CD at .25%). Most land contracts are structured as balloons though, which means the seller collects a pretty penny in payments and interest, then 2 or 3 years down the road gets a lump sum when the buyer refinances.