You can face a lot of challenges getting approved for a mortgage if you have bad credit. Did you also know that it is harder to get a loan if you have no credit? If you have no credit at this time, you can still purchase a home, though. While there are several options you can pursue, the best way is to buy a house on contract. Here are some details to help you understand what this means and how it works.
The Seller Finances the House
Buying a house on contract is the same as buying a house through a lease to own deal. The main premise of the deal is that the seller finances the house to you instead of you going through a lender. To buy a house through this method, you must find a homeowner that is willing to keep the mortgage on the property. Most homeowners do not sell through this method, but some do. It does not hurt to ask if you find a house you want to buy that is not listed as a contract deal.
You Sign a Contract
Next, you must sign a contract with the homeowner. With the contract, you must agree to several things. First, you must offer a non-refundable down payment. If you decide at any time that you do not want to purchase the home, you do not get this money back. Secondly, you agree to make monthly mortgage payments to the seller. Finally, you agree to pay the property taxes and insurance on the home. You might also have to agree to other stipulations and rules.
You Get a Loan by a Specific Date
The final thing to know about this type of deal is that it does not last forever. You will eventually be required to get a mortgage on the home, but you will have time. Most sellers offer five to ten-year contracts when selling through this method. At that time, you will need a loan to pay for the home.
Buying a house through contract or lease to own is a smart move if you have no credit. Keep in mind; you might want to start working on building your credit after moving in, as you will need to get a loan in five to ten years. If you have questions about buying a home with no credit, talk to a real estate agent about no credit financing today.Share