Land Contract

I signed the papers and wired the down payment to buy my first home yesterday. I don’t actually own it yet though. The papers were for a 2-year land contract deal. The current owner still technically owns it for two more years. At the end of that two years, I owe him the rest of that money. The idea is that I’d get a loan then to pay that, then I’d have a traditional mortgage. If anything goes wrong, I lose everything I have vested in it (bad).

I would have gotten the mortgage now if I could have, but banks basically laughed at me since I don’t have very much time being self-ish employed. It was surprising to me. I have no debt, great credit, a large down payment, pretty good income, and no dice on a loan. I’ve even been a member of the credit union for about 20 years! Oh well.

My lofty goal is to have the money to pay off the house before I need to get the mortgage, but that’s extremely wishful thinking.


  1. Ter says:

    You never know, a whole lot can happen within two years. Good luck with it!

  2. Chris Burton says:

    Seriously? You would think having an established relationship with a bank that long, they would consider giving you a loan. Especially without having bad credit. From what you wrote, it appears they see your self-employment as a risk and liability.

  3. RioBrewster says:

    You can thank the politicians for that. After years of encouraging banks to give loans to anyone with a pulse, and then using taxpayer $$ to bail out Fannie and Freddie, the new rules make it really difficult to get a mortgage.

    We’ve paid off multiple mortgages, own five houses outright (sold one in CA and bought five with the proceeds) and have credit ratings in the 800’s. It was still like pulling teeth to get a loan where we were putting 40% down. We had to document where every dollar of that 40% was coming from. And I work for the state!

    Hopefully they will loosen the criteria a bit by the time you need a loan. We bought our first house in CA with a land contract, so they can work really well.

    In the mean time, enjoy your home and treat yourself with a tall, cold beer. You are – after all – adult-ish now!