After the housing market crash in 2009, new state and federal mortgage lending regulations were implemented, and existing regulations were tightened. The majority of these new rules were beneficial, protecting homebuyers and ensuring that predatory practices could not cause similar events to take place in the future.
However, after the new regulations were implemented, many financially stable homebuyers found themselves unable to obtain a mortgage. This includes buyers who:
- Are self-employed and may deduct significant expenses from their tax returns;
- Earn a significant amount of their income on commission; or
- Had recent credit issues from divorce or medical debts.
- Had severe credit events such as foreclosure, bankruptcy or a short sale
The new regulations may have helped the traditional lending market, but ultimately prevented some families from obtaining stable, long-term housing and financial security through homeownership.
This is where Slow Flip comes in.
We offer financially stable homebuyers, who can provide the necessary down payment and show financial responsibility, the opportunity to purchase a home on a contract for deed (CD) until they qualify for a mortgage. A CD creates a contract in which the seller of the property (Slow Flip) provides a buyer a period of time to pay off the contracted price of the home. The buyer eventually satisfies the contract, either by qualifying for a mortgage, or by paying the contract in full (sometimes by selling the property).
Let Slow Flip help get your family into a home. Contact us today to discuss how you (or your client) might qualify for a Slow Flip contract for deed.
Benefits
The most common question we hear from buyers and Realtors is: Why buy? Why not just rent until I can qualify for a mortgage?
We believe a house is more than just a physical building that stores your belongings. Your house is your home. Owning a home provides stability and security, both physical and financial. When you own a home, you are no longer subject to rent increases or short lease terms, and your home cannot be sold out from under you. Currently, in the Twin Cities, rental homes are scarce and rents are high, making renting financially uncomfortable for many families.
The Slow Flip contract for deed program has a completion rate of 99 percent, making it a smart and proven path to homeownership for buyers and families.
Slow Flip’s contract for deed process will allow you to buy a home and start building a future with your family – now.
If a buyer will qualify for a mortgage within a few months and can maintain their present housing until that point, it makes more financial sense to wait to purchase a home. If mortgage qualification is likely to take one year or more, or if there is a unique opportunity to purchase a specific home that will likely not be available when the buyer will qualify for a mortgage, the Slow Flip contract for deed may be an option to consider.
Our Process
Step One: Get Pre-Qualified
Prospective buyers must meet the primary criteria:
- A minimum of 10% down payment
- Reasonable debt-to-income ratio for the target home price
- A plan to pay off the contract within five years
- Have your relator contact us to see if you pre-qualify
To see whether you prequalify, have your realtor contact us.
We have a discussion of specific situation details to ensure that the client is a good candidate for the program. It is always recommended that the buyer discusses mortgage options first with a licensed mortgage originator to help determine steps and timing to qualify for a mortgage.
Step Two: Get Pre-Approved
Gather documentation regarding down payment, assets, income, credit and employment are submitted and reviewed to determine qualification for a Slow Flip contract for deed. Once the application is started, these documents can be uploaded or emailed. The review can be completed within 24 hours!
Step Three: Look For A Home!
The most exciting part of the process!
Slow Flip can help work with Realtors and their buyers to help them identify homes that are acceptable and affordable for the buyer’s financial situation.
Step Four: Down Payment
Once a home is under contract and in the inspection contingency period, buyers will remit their down payment – equal to earnest money – to the title company. An exception to this step is if the new home purchase is contingent on another event, such as the sale of the client’s current home. There is a slightly different process if the new home purchase is contingent on the sale of client’s current home.
Step Five: Inspections
As in any home purchase transaction, the buyer will coordinate any desired inspections with their Realtor and inspectors at their own expense and timing within the purchase agreement parameters. Slow Flip does not require inspections unless there are obvious or discussed issues with the home.
Step Six: Appraisal, Title and Insurance
The buyer does not need to have an appraisal for the purchase of a home on a contract for deed. Slow Flip will usually have an appraisal performed for its acquisition process and to verify the value is in line with the parameters of the transaction. The title company used by Slow Flip to acquire the property is also used to sell the property to the contract for deed buyer. The buyer will choose their own insurance provider.
Step Seven: Closing
At closing, the buyer has likely already provided all the down payment; but there are some items to account for on the day of closing. These include:
- Realty admin fee (buyer’s Realtor’s brokerage)
- Annual homeowners insurance premium
- Daily property taxes and interest through the end of the closing month
- Any association dues and expenses if applicable
Step Eight: It’s YOUR home…
…subject to making payment and adhering to the terms of the contract! For the next months or maybe years, the CD homeowner works towards adjusting credit and finances to align with mortgage qualifications.
Step Nine: Convert to Mortgage
Ideally within five years, the contract for deed homeowner will qualify to refinance into a mortgage. Changes in the interest rate and housing markets happen frequently, so hopefully a mortgage with a lower rate than your contract for deed will be available sooner than later!