Your credit score is NOT a factor in qualifying for a contract for deed
We’ll start with the good news: your credit score does NOT factor into your ability to qualify for a contract for deed with Slow Flip!
A primary benefit of contract for deed is that to qualify, you need adequate assests, income and exit strategy (a payoff plan). You do not need a specific credit score. Credit scores will rise and fall throughout your life, but what matters most in affording a home is your present and projected debts and income.
The primary criteria Slow Flip uses to determine eligibility are:
- A minimum of 10% down payment
- Reasonable debt-to-income ratio for the target home price
- A plan to pay off the contract for deed within five years (on average, it takes our clients just 2 ½ years to pay off CDs)
Your mortgage lender is your best advisor for the financial and credit steps necessary to pay off the contract for deed. Their advice on steps and timing is helpful for you (and us) in determining if a Slow Flip contract for deed is a good move for your housing future.
Slow Flip vs Mortgage: Rates and Costs
A mortgage is the ultimate goal for anyone who wants to purchase a home. If a mortgage is not an option at this time, here's what you can expect with a Slow Flip Contract for Deed:
- Contract for deed rates are usually 5.2% to 6.2%. With most clients reading a few years to qualify for a mortgage. It's likely mortgage rates at the time are lower and an incentive to pay off the contract for deed.
- There is no pre-payment penalty...and usually no balloon. Most buyers have plenty of time to adjust their finances and credit to qualify for very beneficial mortgage terms.
- A price premium ranges from 3.9% to 11.5% of the home price. This is not an out of pocket expense, but is built into your contract for deed home price. Other alternative home purchase options have an annual premium of as much as 5%...every year!
- There is no mortgage insurance because a contract for deed is not a mortgage!
- Although we require that buyers pay the contract for deed in full within five years, most of our clients achieve payoff much more quickly. In fact, the average time it takes our clients to pay off their CDs, usually by converting to a mortgage, is just 2 ½ years.
Please discuss with your Realtor, mortgage lender and other advisors to help decide if the Slow Flip contract for deed option is the right solution for you and your family.