This Seller's Disclosure Notice of Financing Terms Contract for Deed serves as notice to Purchaser of the purchase price of property and how payments, interest, and late charges are set. This document should be completed by Seller of property and provided to the Purchaser at or before the signing of the contract for deed.
A Terms contract land with balloon payment, also known as a land contract or contract for deed, is a real estate financing agreement that allows a buyer to purchase property by making regular installment payments to the seller over a specified period. The key feature of this arrangement is the inclusion of a balloon payment, which is a large lump sum payment due at a certain point during the contract period. These contracts are commonly used in situations where traditional financing options may be difficult to obtain, such as when buyers have limited credit history, an irregular income, or are unable to secure a bank loan. The terms of the contract, including the repayment period and the size of the balloon payment, are negotiated between the buyer and seller. The buyer typically takes possession of the property and makes regular monthly payments towards the purchase price. At the end of the contract period, the buyer is required to make the balloon payment, which constitutes the remaining principal balance. This balloon payment is usually significantly larger than the regular monthly payments made throughout the contract period. The contract may also include terms for default and forfeiture, where the buyer risks losing the property if they fail to make the balloon payment or meet other contractual obligations. There are several variations of terms contract land with balloon payment: 1. Fixed-term balloon contract: In this type of contract, the repayment period and the size of the balloon payment are fixed from the beginning. The buyer knows exactly when the balloon payment will be due and can plan accordingly. 2. Adjustable-term balloon contract: These contracts allow for flexibility in the repayment period and the size of the balloon payment. The terms can be adjusted during the contract period based on agreed-upon factors such as changes in interest rates or the buyer's financial situation. 3. Interest-only balloon contract: With this type of contract, the buyer only pays interest on the principal balance during the contract period, with the balloon payment representing the full principal balance. This arrangement can provide lower monthly payments initially, but the buyer must be prepared to make a substantial balloon payment at the end. 4. Lease option balloon contract: In some cases, a land contract may also include a lease option, where the buyer has the right to lease the property for a predetermined period with the option to purchase it at a later date. This type of contract often requires a balloon payment when exercising the purchase option. It is important for both buyers and sellers to carefully review and understand the terms and potential risks associated with a terms contract land with balloon payment. Seeking legal advice and conducting thorough due diligence on the property is highly recommended ensuring a smooth and secure transaction.
