When to use a Bond for Deed
¨ Mortgage Not Assumable—Use a Bond for Deed whenever the existing mortgage is not assumable. Anyone can make the payments of an existing mortgage and court decisions have clearly established that permission of the mortgage company is not required, unless the mortgage specifically prohibits Bond for Deed.
¨ In Lieu Of A Lease/Purchase—The Advantages of a Bond for Deed versus a Lease Purchase to both Buyer and Seller are numerous and significant. Any party considering a Lease Purchase should investigate the clear advantages of a Bond for Deed before entering into a Lease Purchase Agreement.
¨ Purchase/Property Doesn’t Qualify– Use a Bond for Deed whenever the Purchaser or the property does not qualify for a loan. Many would-be Purchasers can not qualify for a new mortgage...sometimes the property doesn’t qualify...the reasons are endless. The terms of the Bond for Deed are strictly between the Seller and the Purchaser.
¨ Owner Financing—Use a Bond for Deed whenever the Seller will finance all or a portion of the sales price. Canceling a contract for non-payment is much less costly than foreclosure.
¨ Save Money—use a Bond for Deed to save closing costs. When you buy or sell property under the Bond for Deed contract, you do not have to pay ‘points’, appraisal and survey fees, Private Mortgages Insurance (PMI), or for repairs required by a mortgage company before it will make a loan.
¨ Bridge Financing—use a Bond for Deed to buy or sell property today and ‘bridge through’ to a future period when mortgage rates become more favorable, market values increase, the property is renovated or improved, or insurance underwriting and rates are more favorable.
