We hear almost on a daily basis about how our economy is not likely to grow unless housing becomes affordable and money becomes available to help people move in. It is certainly true that home values have fallen off their overly inflated highs of a few years ago. You would have thought that millions of people would be more eligible to buy homes now, as values have dropped up to 35% compared to where they were. This is not the case, however, as money is much tighter to come by, even as home values have been shrinking this way. This has just resulted in the overall availability shrinking and not improving. While home prices may have shrunk, availability of money has retreated even further and so it can seem that your Midwestern dream home in suburban Detroit is even farther away from you now.
Generally speaking, buying a home with poor credit has always been somewhat of a challenge, but it seems to be even more so now. When we look back through the annals of history, we will no doubt read lots of books about the great recession, its causes and also many chapters devoted to how predatory lending, a failure of government and greed within financial sectors led to the downfall. It certainly appears that a combination of circumstances led to the “housing bubble” and brought us to where we are now. However, for the vast majority of people, all they want to do is to move into their dream home. Unfortunately, first time home buyers with bad credit caused by the recession or other bad luck along the way face a barrage of “no” as they try to line up a starter home for their family.
As we are told that the value of homes is now starting to bottom out, this should be an ideal time for somebody to buy. This should be the time when housing is affordable for everyone, yet it seems more difficult than ever to qualify with those banks and mortgage lenders, and actually get to move in. So how do we make housing affordable? Land contracts may have the answer to these questions. These contracts are very popular in the Midwest and especially in Michigan and are really fabulous alternatives if you have been turned down for lending elsewhere.
A land contract is negotiated between a buyer and a seller. The seller is motivated to sell the property for one reason or another and the buyer really wants to work something out so he or she can move in. This makes the terms and conditions very flexible from each party’s perspective and when buying a house with poor credit, the buyer can negotiate the amount of money necessary on a monthly basis, as well as the specific number of repayments.
Land contracts have fewer restrictions than traditional mortgage company and bank conspired instruments. For the buyer, there are few hidden costs and the seller typically pays for the production costs associated with the agreement. So long as all parties are realistic and open in all their negotiations and agreements, this can work for both parties. Anyone considering a land contract would be advised to work with experts who can help to smooth things over. Despite this most voracious of recessions, many people have been able to open the door to their dream homes, after considering and implementing land contracts.
