# Mortgages vs contract for deed



## Katskitten (Aug 5, 2010)

We have been looking at buying a house in an attempt to lower our outgoing expenses and acquire a permanent residence, What my basic question is: When buying from an owner on contract what are the payments like vs an FHA type loan? 
Are the payments higher or about the same as a standard mortgage loan from a bank? 
For the most part we have rented all our lives and have come to the conclusion that it is money down the drain and are fighting like heck to get out of an economically depressed area. 
Maybe someone here can expound on pros and cons of buying this way for us.
Thank you

Elaine


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## Dutchie (Mar 14, 2003)

Generally speaking you pay a higher interest on a contract for deed because the seller assumes that you have a credit issue which prohibits you from getting a mortgage. So the seller assumes a higher risk and charges accordingly.

Your risk is that you can lose the property if the seller doesn't pay the mortgage and it goes to foreclosure. If you want to go the contract for deed route, make sure the property is clear of a mortgage or any other liens.

The property tax becomes your responsibility, and you should pay it yourself directly to the county so the property cannot be sold for non-payment of taxes.

Those are the two thing that come to mind.


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## edcopp (Oct 9, 2004)

You can get whatever terms you and the seller agree to, so it might pay you to learn to negotiate a bit.


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## ChristieAcres (Apr 11, 2009)

Add this to what edcopp posted:

You get Title Insurance, use an Escrow Agent & Real Estate Attorney, and get your Real Estate purchase RECORDED. That way, the Seller acts like the Mtg Lender, but cannot encumber nor sell the property out from under you.


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