Land Instalment Contract

[Grayson Wright]

Through a Land Instalment contract, took over payments of a house in MD in 2019.                                                             Currently, $260,000  are still owed on the mortgage.                                                                                                           Did a remodel on it and have been renting it out for the past two years. $2,700 rental on a $1,700 mortgage.                  

House has gone up in value about $110,000 and is now worth around $450,000 Wanted to do a refinance to cash out to invest in other properties, but lenders are telling me I can't refinance because title is not in my name. 

Basically they are saying I have two options. 

1- Do a first loan where I purchase the house and then a second loan to refinance. 

2- Pay the house off and then refinance.          

Any suggestions?

[Albert Bui]

Ive worked on many land contract or installment contract (bond for deed is another name) deals.

To put it short, if you’ve paid 12 months on this installment agreement above you can consider this a straight shot refinance (you have equitable interest in the property and per agreement you are equitable owner just not legal title owner ..yet).

If you’ve paid less than 12 months this would be considered a purchase by Fannie Mae and yes you’d have to purchase first then refinance. But someone telling you that you must do two transitions is just providing bad advice because the question is what specific law, guideline, or stipulation is requiring or preventing this ? This is the question I would ask.

Based on the above If you were our client, I would ask you how you’ve structured this land contract. I’d like to get a copy of it to review and ask you how long you’ve paid on this agreement.

The rest of the loan qualification process is like any other first time buyer loan just the land contract stipulation makes the deal have more “hair,” on it.

Best of luck on structuring your mortgage plan.