A private mortgage, better known as land contract is offered out by a seller to a buyer who does not want to engage a mortgage company in the transaction. This means that that one does not have to be a bank or a lending institution to offer a mortgage.
Basically, it is an advantageous option to a buyer who does not qualify for a bank loan for one reason or the other. They might be poor on credit or might have been denied normal mortgage financing especially if they did not have the required deposit. However, this is no reason why anyone should miss out on a good home offer. This agreement takes place between two people, the seller and the buyer, with papers drawn up by the relevant solicitors according to the law of the land. The agreement is binding and perfectly legal. For a seller who has a property in marginalized areas that proves difficult to sell, this is perhaps the best option.
Sometimes when the buyer does not qualify for credit, a third party might come in as the financier, but of course they charge an interest rate on the loan. In both cases, the title is retained until the buyer clears the loan. The seller retains the title of the property and incase the buyer is unable to continue with the payment, the home owner simply repossesses the property. This has no risk in itself.
Later, the mortgage holder might decide to sell off the same mortgage to another person. The law allows him/her to do so and this is what makes this private mortgage the most flexible. If they decide to sell the home at single lump sum amount, they clear the mortgage with the original seller and keep the extra cash. When drawing up a mortgage agreement, there will always be a clause that will allow the .buyer to pay off the initial mortgage, or convert it into conventional one.
For the buyer, private mortgage financing is a full advantage. For them, it is a win -win situation and it is the one that does not requires them to have tussles with banks and companies negotiating for loans.
Such homes as are to be disposed of in this manner are listed on internet sites. All relevant information about them including the price, location and contact details of the owner must be furnished. All one needs to do is get clicking and you have got a home.