There are many programs that are similar to (and often confused with) the contract for deed). These include lease-to-own and rent-to-own, land contract, land installment contract, bond for deed, and deed of trust, among others. Continue reading to learn more about the deed of trust.
What is a Deed of Trust?
When a home is purchased using a deed of trust, the lender appoints a third party as the trustee, according to PocketSense. The trustee will hold the title to the home until the homebuyer has paid off the full home loan.
In many ways, a deed of trust is like a mortgage. The trustee has no rights to the house or control over it. The main difference is in how a default and foreclosure is handled. If the homebuyer defaults on the loan, the only thing the lender needs to do before foreclosing on the home is to provide proof of default to the trustee. Unlike a standard foreclosure, a judge doesn’t need to give approval.
The Pros and Cons of a Deed of Trust
The obvious downside of a deed of trust is that foreclosure can happen quickly and easily. This leaves homebuyers without much power and even fewer options. A nonjudicial foreclosure can be challenged in court by filing a lawsuit, but this is expensive and takes a long time.
Deed of Trust vs. Contract for Deed
The similarity between these two options is that a third party – in our case, Slow Flip – holds the title until the purchase price is paid in full. In our contract for deed, we require full payment to be made within five years. Most of our homebuyers effectively make that full payment by transitioning the contract for deed into a mortgage.
Do you have questions about our contract for deed program and whether it’s right for you? Get in touch today.
The Slow Flip contract for deed program helps families in the Twin Cities metro area of Minneapolis, St. Paul and surrounding suburbs purchase a home using a contract for deed, or CD, when a mortgage is not possible. The Slow Flip contract for deed can be an ideal tool to purchase a home when buyers need time to adjust their income, credit, debts or other financial components so they can eventually qualify for a mortgage.
Are you or your clients interested in learning more about the Slow Flip contract for deed? Contact us at 952-417-0000 today.