Bought on contract

[tigger22472]

What is the name of your state? Indiana

When I bought my house on contract it was based on 5 years with an option to extend that or to finance through a financial institution. DH and I don't have great credit so this was the best option at the time. My question is, when we do try to finance it through an institution is it considered a refinance or a first time loan? If it's a first time loan how much weight would the fact that we've paid the house on time for X amount of years?

[HomeGuru]

Originally Posted by tigger22472

What is the name of your state? Indiana

When I bought my house on contract it was based on 5 years with an option to extend that or to finance through a financial institution. DH and I don't have great credit so this was the best option at the time. My question is, when we do try to finance it through an institution is it considered a refinance or a first time loan?

**A: it would depend on the lender's underwriting criteria. I have seen it treated both ways.
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If it's a first time loan how much weight would the fact that we've paid the house on time for X amount of years?

**A: it would look good for credit purposes.

Tigger,

This can be considered as a land contract refinance. Your loan to value will be based on a new apppraisal. I hope you have been keeping cancelled checks to show as a mortgage history. You will need to show at least 12 months.

How are things up there at Indiana Beach? Cool weather slowing things down any?

[tigger22472]

I keep all my receipts as well as the contract so we're hoping when we're ready to 'refinance' that it can be shown as proof. Our credit isn't very good due to medical bills and what not but we've never lost a house at least..LOL

It's still pretty hot here most of the time yet. Just ready for the tourists to leave so we can go back to normal life around here.

[HomeGuru]

Originally Posted by tigger22472

I keep all my receipts as well as the contract so we're hoping when we're ready to 'refinance' that it can be shown as proof. Our credit isn't very good due to medical bills and what not but we've never lost a house at least..LOL

It's still pretty hot here most of the time yet. Just ready for the tourists to leave so we can go back to normal life around here.

**A: the lender can send a VOM to your Seller so they can get a positive payment history.

[tigger22472]

That's good to know.. thanks!

Some lenders will, and some lenders will not. With the property being an "arms length transaction," the majority of lenders will only accept cancelled checks as proof of payment history.

[HomeGuru]

Yes, some lenders actually want both.

One other condiseration on land contracts and financing is whether or not the land contract has been recorded with the county. They are much easier to refinance if this has been done. Twelve month seasoning on title can help get to a wider range of programs.

Again, if this has not been done, it will not keep you from getting financing.

[HomeGuru]

And some lenders will not recognize a land contract if it has not been recorded.

Ssssssssooooooo**************..

Tigger,

Is the land contract recorded?

Do you always (at least the last twelve months) pay with checks?

[tigger22472]

Yes the contract is recorded and I pay by check and get a monthly receipt sent to me. Our credit being as bad as it is, mostly due to medical bills we aren't expecting to be able to go out tomorrow and to it and we have plenty of time left on the contract (3.5 yrs) but we wondered how much it would help or hurt us with the land contract.

I would have to say you are in very good shape with the way your contract is structured, and the method of payment you are using.

You are a role model for others who have similar situations, or considering land contracts.

When you are ready for a pemanent mortgage, it will be treated as a refinance.