What is a Land Contract Ohio?
In real estate, buyers and sellers must be knowledgeable in order to make informed decisions. Have you heard of a land contract Ohio? If you are looking to buy land or a home, and you hear that term, there may be some details you’d want to know, first.
Land Contracts: A Car Payment, but On Your Land
Before we get too technical here, let’s break this down in a way that many people can relate. You want to buy a new car, so you head to the dealership and find the latest Nissan in the showroom. However, in most cases, you won’t pay cash for the entire payment right then and there – that’s a good chunk of change. Instead, you set up installment payments over 3, 5, or even 10 years. The car is yours, but you have to make those payments each month; otherwise, you risk the bank or lending institution taking the car from you.
Think of a land contract Ohio as a car payment… but on your land. The buyer usually makes a down payment and then will pay monthly installments of the principal plus interest over a number of years (err, just like your car payment, right?). After the payments are all made, the seller agrees to transfer the deed for the Ohio property for sale
or home (ownership) to the buyer.
This Sounds Strange… What’s the Catch?
You may have noticed by now that this all sounds similar to a mortgage. The big difference is that you are not borrowing money from a bank and paying back the purchase price plus your mortgage payments to the bank. Instead, you are paying these installments to the seller.
Typically, this method is ideal for people who may not qualify for a mortgage. This method of real estate was popular in the 1980s. If you could not qualify for a lender to back your Ohio real estate
investment, you might go the route of a land contract Ohio.
It might seem ideal for those who have many investments, low credit, or do not want to go through a bank. However, as with anything, there are risks and challenges.
Below are a few points to consider when taking this risky route:
- You do not own the property until you have made your final payment.
- Until you have paid 20% of the purchase price, or made 5 years of payments, missing a payment is grounds for eviction – just as if you were a tenant, renting.
- If you are evicted, you lose your down payment, installment payments up until that point, and the value of any improvements you have made to the property.
Nonetheless, an Ohio land contract can help those who cannot obtain a bank loan, to purchase property and have a chance to own real estate.