Bond for Deed Contracts in Mandeville, LA

Bond for Deed contracts in Mandeville, LA, are commonly used when:

• When the Property or Buyer doesn’t qualify for a traditional mortgage.
• Used as Bridge Financing to temporarily finance today until a more desirable future date when refinancing is more favorable.
• Buyers are Self Employed, recently Divorced, re-establishing their credit.
• Investors or Landlords want to earn extra income or gain the full value of their investment.
• Family or friends selling property to loved ones and desire a third-party communication and peace of mind knowing there’s unbiased accurate
accounting.

Bond for Deed

A “Bond for Deed Contract” is a Louisiana contract in selling real estate where the purchase price is paid in installments, and the title is transferred upon the fulfillment of the payments. In other states, it is called “Land Contract” or “Contract for Deed."

The Buyer immediately takes possession of the property, while the Seller retains the legal title to the property until the contract is fulfilled. The Buyer has the right of occupancy, the right to claim a homestead property tax exemption (where allowed by the parish), and the right to claim the interest paid on their income taxes. The Buyer finances the purchase from the Seller, which is known as “Owner Financing.“ If there is an underlying mortgage on the property, this is known as a “Wrap Around Mortgage.” To protect both Sellers and Buyers, Louisiana Revised Statutes requires the services of a licensed escrow agent or attorney when there is an underlying mortgage.

The Bond for Deed contract is a much faster and less costly transaction to execute than a traditional conventional or government mortgage. In a typical Bond for Deed, there are no origination fees, long formal applications, or high closing and settlement costs. Another important feature of a Bond for Deed is that seizure of the property in the event of a default is generally faster and less expensive than seizure in the case of a traditional mortgage. If the Buyer defaults on payments in a typical Bond for Deed, the Seller may cancel the contract, resume possession of the property, and keep previous down payment and installments paid by the Buyer as liquidated damages. Under these circumstances, the Seller can reclaim the property without a foreclosure sale or judicial action. A Bond for Deed is an inheritable contract for both parties.

Benefits to the Seller!

• Sellers often receive more than their asking price - even without an appraisal.
• Sellers have peace of mind knowing the Buyer has invested money and don’t want to lose their investment.
• Sellers no longer pay for maintenance. Buyers pay for regular maintenance and upgrades.
• Sellers no longer pay for taxes and insurances.

Benefits to the Buyer!

• Buyers don’t go through the difficult conventional mortgage loan process, and they don’t need the same stringent requirements.
• Buyers may be self-employed, recently divorced or maybe just trying to re-establishing credit.
• Buyers are not required to have a high credit score.
• Buyers don’t need the traditional 10-20% down payment - down payment is negotiable with the Seller.

Escrow Terms

What is Escrow?

Escrow means that you’re using a “third-party” (somebody who is neither the Buyer nor Seller) to hold something of value, which helps to make your transaction safer.

Ideally, this would be a neutral third-party. The job of an escrow service company is simply to ensure that everybody sticks to their end of the bargain and facilitates the agreed upon contract details.

When you sign an agreement to buy or sell something, you agree to do certain things: the Buyer will pay the agreed-upon amount by a certain time, and the Seller will provide the asset or title for what is sold. Of course, most transactions are more complicated than that.

Who is the “referee” when you sign a complicated agreement? An escrow agent can provide that service – ensuring that everybody does what they agreed to do and acting as a middleman to safeguard assets in the process.

That’s why it’s important to use a trusted third-party administrator!

Real Estate Escrow

Real Estate Escrow is the sale and purchase of a residential home or commercial property. Escrow opens when a signed agreement is delivered to an escrow agent, who helps to ensure that the conditions of the contract are all satisfied.

Escrow closes when everything is paid in full, and the property title ownership is transferred to the Buyer. There are usually two closings, one at the time of signing the Bond for Deed contract, and one when the title and ownership transfers.

Perhaps the first time you’ll notice escrow in a home sale is when earnest or down payment money is paid. The Buyer writes a check payable to the escrow company, who will either refund the money, apply it to the purchase price, or pass forfeited funds on to the Seller (if the Buyer fails to meet any requirements). If the check was instead payable directly to the Seller, the Buyer would take a significant risk – what’s to stop a dishonest “Seller” from cashing the check immediately and making it difficult for the Buyer to complete the purchase?

After the details are outlined to an escrow agent for service in a contract, the Buyer and Seller simply need to do what they agreed to do.

Escrow Accounts

When you make your “monthly housing payments,” you might pay for more than just your home loan of Principle and Interest (P&I). Expenses such as homeowner’s insurance and property taxes might be included in the payment as well.

Insurance premiums and property taxes are often annual expenses. Sellers and Lenders aren’t always confident that Buyers will budget for those expenses properly. If you don’t make those payments, the Seller or Lender is at risk, so ensuring that those expenses get paid is often part of your monthly housing payment called Escrow or Taxes and Insurances (T&I)

With an escrow account, the monthly portion of those expenses added to your monthly payment and deposited into a separate account. Each year, when your insurance or tax bills are due, the money in that account is used to pay the bills (your escrow agent handles this for you). So once again, the escrow account is money held by a third party (not you or your Seller) to make sure that obligations are met.

Premiums for homeowners’ insurance and property taxes may increase. Therefore, your monthly housing payment will also increase accordingly.

Private Mortgage Services

We offer private mortgage services to real people. As a third-party administrator, we collect and hold funds for escrow for real estate Property Taxes, Insurances, Home Warranty Insurance, and Homeowner's Associations (HOA).