Contract for Deed Homes in Southern IL Explained
Not all is lost if you don’t have the greatest credit record or enough money to secure a down payment to buy a house. Mortgage lenders may have denied you financing for your Little Egypt forever home, but there is another way—a contract for deed homes.
In this article, we will explain how a contract for deed homes in Southern IL works, what the benefits are, and what elements it should cover.
Also known as a land sales contract and installment sales contract, a contract for deed enables a buyer to purchase a property without applying for a mortgage loan. When both parties sign this legally binding document, the buyer is allowed to do repairs and some maintenance work on the property, but the legal ownership belongs to the seller until the last payment. After that, the title and ownership of the property are transferred to the buyer.
If you opt for a contract for deed when buying a home in Southern Illinois, here’s what you should expect from the process:
- The buyer and the seller of the property negotiate the terms
- The contract is drafted, signed by both parties, and notarized once they set all the details
- The down payment can vary from 10% to 20% of the total amount, and the interest rate can go 1–3% higher than the market rate—the buyer and seller should decide the exact percentages together
- The buyer pays the installments monthly
- The last installment is typically a balloon payment
- The seller immediately transfers the property’s title and ownership once the buyer pays the final installment
Whether you’re the buyer or seller of the property, you should always check the advantages and downsides before opting for this agreement. The advantages include:
Contracts for deed aren’t risk-free—you can find the downsides in the table below:
A typical contract for deed should include the following elements:
- Information about all parties—Names, addresses, and contact information of the seller and buyer
- Description of the property—Address, location, description (as recorded in the deed), and external appearance
- Inspection statement—A statement about the condition of the property
- Purchase price—Full sale price, including costs and interests
- Installment amounts—The amount of each installment, including the down payment and closing balloon payment
- Number of installments—Predetermined number of monthly installments
- Interest rate—The agreed-upon interest rate, usually fixed
- Governing law—Legal consequences according to the Installment Sales Contract Act
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Real estate transactions can involve many types of documents, many of which we can draw up for you:
- Quitclaim deed
- Estoppel certificate
- Residential lease agreement
- Intent to purchase real estate
Here’s the entire process:
- Open DoNotPay
- Enter the name of the document you want us to make
- Answer some questions to help us customize your document better
With DoNotPay’s help, you can later fax the document to other parties and even get it notarized—all from your laptop or smartphone!
We can help you create other legal documents as well, including:
- Bill of sale
- Promissory note
- General affidavit
- Custody agreement
- Prenuptial agreement
- General business contract
- Child care authorization form
- LLC operating agreement
- Non-compete agreement
- Non-disclosure agreement
- Independent contractor agreement
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