Buying - A Home On Contract
The first two years were a whirlwind of sawdust and paint. Because it was a contract sale, there was no bank appraiser forcing them to fix the peeling lead paint or the cracked driveway before closing. Elias spent his weekends restoring the original mahogany wainscoting. Sarah planted a sprawling perennial garden.
Their contract was "amortized" over thirty years to keep payments low, but the entire remaining balance—roughly $210,000—was due in full at the end of year seven. The plan was always to refinance with a traditional bank once their credit improved and the house increased in value.
As year six approached, panic set in. What if the house didn’t appraise for enough? What if interest rates spiked? What if Arthur passed away before the deed was transferred? buying a home on contract
Arthur didn’t want a bank involved any more than they did. "Banks are slow, and they don't care if the roof is slate or shingle," Arthur told them over lukewarm coffee. "I want the income, and you want the roof. Let’s cut out the middleman."
The biggest hurdle, however, wasn’t the monthly payment; it was the . The first two years were a whirlwind of sawdust and paint
They had spent three years chasing the traditional American dream. They had the steady jobs—he was a master carpenter, she managed a local clinic—but they also had a mountain of student debt and a "thin" credit file that made bank loan officers look at them like they were asking for a trip to Mars. Every time they saved ten thousand dollars, the market seemed to jump by twenty.
The deal was simple on the surface: Elias and Sarah would pay Arthur a $15,000 down payment—every cent of their savings—and then pay him $1,800 a month for seven years. This included a 6% interest rate, which was higher than the banks, but for them, it was the only game in town. Sarah planted a sprawling perennial garden
The day of the "closing" wasn't at a fancy Title company office. It was back at Arthur’s kitchen table, though this time a lawyer sat between them.