Land Sales Contract Solution: Down Payment Installment


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What is most attractive about Land Sales Contracts or seller financing in general is the buyer and the seller can develop agreements that will fit each others needs. Recently a buyer and seller came to an agreement on the selling price of a home. The buyer had very little for a down payment. The seller proposed that the buyer make down payment installments during the term of the agreement. In this case the buyer and seller had to agree on a couple things. First they had to agree how much the down payment would be. Second they had to agree on how many installment payments the buyer could make. In this case, the contract for for 60 months and the seller and buyer agreed on a 48 month down payment installment plan.

The Deal:

Sales Price………$250,000
Down Payment…….10% ($25,000)
Buyer will pay 50% ($12,500) at closing and will pay the rest of down payment over 48 months at $260.42 per month.
Interest Rate…….7%
Payment………….$1496.93
Payments Amortised over 30 years
Buyer to pay Property Taxes ($1953 per year) and Insurance ($258) during term of contract.
Contract Term…….60 Months (Balloon payment of balance due month 61)

Monthly Payment Break Down

Contract……….$1468
Down Payment..$260.42
Taxes…………..$162.75
Insurance………$21.50
Total……………$1912.92

If the seller and buyer had agreed that the buyer was to make interest only payments instead of a 30 year amortization then the payment would be a little smaller.

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