Require These 3 Important Details When Selling A House On Contract
If you want to buy a new house but cannot seem to sell your current one, you could always sell it on contract. Selling a house on contract offers some hefty benefits, but there are also some drawbacks of this situation. The main drawback is that you must keep the mortgage loan in your name for a certain length of time, which may be 5 years or longer. The benefit is that you can have someone else paying for the house, taking care of it, and being responsible for all the repairs. If this sounds like a good idea to you, you should make sure the contract you use includes the following three important details.
The buyer is responsible for taxes, insurance, and repairs
The good thing about selling a house on contract is that the buyer becomes responsible for everything related to the house. This type of deal is as if the buyer actually bought the house and has a loan on it, except that you act as the lender in the deal. It is vital for you to include these details in the contract when you create it, and make sure it clearly states that the buyer is responsible to pay the taxes, insurance, and repairs for the house.
The risks the buyer has for defaulting on the payments
The second important thing to include on the contract involves the risks the buyer has if he or she fails to make the agreed-upon payments. Because you are the lender in the deal, you will have the right to foreclose on the house if the buyer does not make the payments. In the contract, you should include the process that would be used if the buyer misses a payment. You could also include a stated late fee charge that will apply if the buyer pays the monthly payments late.
The length of time the contract is for
It is also important to include the length of time this contract is for and how the balloon payment will occur. If you do not want to hold the mortgage on the home for the remaining time frame your loan is for, you will need to include a length of time the buyer has to get a loan on the house. This can be five years if you desire, or it could be 30 years. It is entirely up to you, but when the time frame is over, the buyer must get a loan in order to pay the balloon payment on the house. The balloon payment will be equal to the remaining principle balance on the house loan you have with the buyer.
Creating a contract for this purpose can be tricky, but you could always talk to a real estate agent about this. To learn more about selling a home like this or buying a home on contract, contact a real estate agent today.