neilbedwell
Junior Member
What is the name of your state (only U.S. law)? Kentucky
Hello everyone! My wife and I have been looking for some vacation property to purchase for the last few months. Last week I stumbled across an ad on Craigslist for some property near a lake that we both really like that's not too far from home. I called and inquired about the property and this past Saturday we went and looked at it. Basically, the property is farmland that is near the lake that a land development company has purchased and is subdividing into lots and selling. The company has 67 lots in the area right now for sale. We looked at most of the lots in the area and found one that we really, really like. We met with the representative there at the property that day and he outlined the purchase details for us. Basically, from what he told us they sell all their properties on land contract. Minimum payment is $150 per month and the interest rate is a flat 5% for the life of the loan. He priced the property we looked at for $12,500. It is a little over an acre in size. We also decide to purchase the adjoining lot for $12,000. So, we will be paying $300 per month for the two lots for right at 8 years. Now, like I said, this is a land contract. I have NO experience whatsoever with a land contract. My wife and I each have credit scores over 800. We have a good income and our primary home is paid for. We were looking at trailers and small homes around the lake originally until we found this raw land that we like so well. I have the 20% down payment that a bank would ask for since this is raw land but it would clean out a good chunk of my current savings and I hate to go that low. We have NO desire to borrow against our primary home for a vacation property for obvious reasons. Thing is, I doubt I could get an interest rate at our local bank that is that much better than 5% they are offering us, even with our credit scores. So, what am I missing here? Is doing this on a land contract a huge mistake? Chances are we won't build anything on the property for some time so it'll just sit there while we're paying for it. The representative mailed the contract to me today and I am planning on starting the process to get a title opinion on it as soon it gets here. We are going to take our time reviewing the terms of the contract. What is really disturbing to me is that none of the title companies I spoke with today would sell me title insurance. I REALLY want title insurance but I guess just getting a title opinion is the next best option. I spoke with the representative about any title work that was done and he told me that the company had requested a title opinion and it came back clean and that they had purchased title insurance. I know that their insurance policy will not cover me, but is there any benefit to me requesting a copy of it? Thanks so much for all your help!
Edit: I also want to add that the representative said that there would be no pre-payment penalties. I can send him a check at any time for the balance owed and the property is ours. The land contract was also not mandatory. I could purchase the land outright for cash or obtain my own financing if I wish. Like I said, though, the 5% flat interest rate and no money down seems like a decent enough deal if the fact that it is a land contract that I can't get title insurance on is not a deal breaker.
Hello everyone! My wife and I have been looking for some vacation property to purchase for the last few months. Last week I stumbled across an ad on Craigslist for some property near a lake that we both really like that's not too far from home. I called and inquired about the property and this past Saturday we went and looked at it. Basically, the property is farmland that is near the lake that a land development company has purchased and is subdividing into lots and selling. The company has 67 lots in the area right now for sale. We looked at most of the lots in the area and found one that we really, really like. We met with the representative there at the property that day and he outlined the purchase details for us. Basically, from what he told us they sell all their properties on land contract. Minimum payment is $150 per month and the interest rate is a flat 5% for the life of the loan. He priced the property we looked at for $12,500. It is a little over an acre in size. We also decide to purchase the adjoining lot for $12,000. So, we will be paying $300 per month for the two lots for right at 8 years. Now, like I said, this is a land contract. I have NO experience whatsoever with a land contract. My wife and I each have credit scores over 800. We have a good income and our primary home is paid for. We were looking at trailers and small homes around the lake originally until we found this raw land that we like so well. I have the 20% down payment that a bank would ask for since this is raw land but it would clean out a good chunk of my current savings and I hate to go that low. We have NO desire to borrow against our primary home for a vacation property for obvious reasons. Thing is, I doubt I could get an interest rate at our local bank that is that much better than 5% they are offering us, even with our credit scores. So, what am I missing here? Is doing this on a land contract a huge mistake? Chances are we won't build anything on the property for some time so it'll just sit there while we're paying for it. The representative mailed the contract to me today and I am planning on starting the process to get a title opinion on it as soon it gets here. We are going to take our time reviewing the terms of the contract. What is really disturbing to me is that none of the title companies I spoke with today would sell me title insurance. I REALLY want title insurance but I guess just getting a title opinion is the next best option. I spoke with the representative about any title work that was done and he told me that the company had requested a title opinion and it came back clean and that they had purchased title insurance. I know that their insurance policy will not cover me, but is there any benefit to me requesting a copy of it? Thanks so much for all your help!
Edit: I also want to add that the representative said that there would be no pre-payment penalties. I can send him a check at any time for the balance owed and the property is ours. The land contract was also not mandatory. I could purchase the land outright for cash or obtain my own financing if I wish. Like I said, though, the 5% flat interest rate and no money down seems like a decent enough deal if the fact that it is a land contract that I can't get title insurance on is not a deal breaker.
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