If you’re thinking about using a land installment contract to buy a home in Indiana, you should first learn how it can work and how it can’t. Some claim it’s an inexpensive alternative to a mortgage. But it turns out there’s more to the story than that, including a lack of regulations and legal protections that allow con artists to thrive in this area.
What are land installment contracts good for?
These contracts can be helpful for those who are trying to get a mortgage but have been unable to qualify. All it takes is one streak of financial missteps for you to do significant damage to your credit score.
Even if you’re sure you’ll be able to keep up with mortgage payments, that doesn’t necessarily mean the lenders will see it that way. People often turn to land installment contracts when a mortgage is in the cards for them financially but their track record doesn’t show it.
Land contracts go by a variety of names, such as:
- Contracts for deed
- Bonds for deed
- Agreements for deed
- Land installment contract
But it’s important to remember that no matter what you call this real estate arrangement, it is not a mortgage. It’s a type of seller financing.
With a mortgage, you’re legally protected in a number of ways. That’s not the case with a land installment contract. Land contracts lack regulation, and countless scammers take advantage of this.
Land contracts aren’t all bad. These contracts are often offered by nonprofit housing groups as a way of providing people with a manageable pathway to owning a home. But anywhere there’s a lack of regulation, there will also be those taking advantage of the situation.
Many financial traps are out there among legitimate land contract sellers, designed to make money at the expense of potential buyers. When you’re looking for a mortgage alternative, it’s in your best interest to watch out for these scams to protect yourself and your finances. If you want to stay on the safe side with land installment contracts, you may be better served by working with a nonprofit housing organization.