In my last post, I explained a short sale and how it can benefit buyers and sellers. Many people have poor credit scores due to the current economy. Let's say you were off work for quite a while and fell behind on your bills. You're now back to work, and meeting all of your monthly obligations. Things are looking up for you! However, your credit score will take a while to reflect this.

Unfortunately, you might be in a situation where you're being told you don't qualify for a mortgage. First, before you do anything else, check with Grandview Lending. We have a variety of mortgage options and one might be a good fit.

An alternative for those who cannot qualify is a land contract. You would make scheduled monthly payments to the seller who holds the title (has ownership) to the property. And he will do so as long as you have a balance remaining. As soon as the house is paid off, the seller will give you the deed.

You can choose to pay off the balance sooner than the contract requires by paying more each month or by a lump sum. Some have a scheduled date for the buyer to take ownership through a traditional mortgage. This is beneficial to give you a few years to build your credit back up to where it needs to be.

One major advantage when buying a house on land contract is that you don't have to make a large down payment. There are disadvantages as well, and the biggest one is that the seller often charges more because you're not required to make a large down payment, and he knows that you don't have many other options.

I'm familiar with one couple who sold their house on land contract and required no money down and the buyer basically just took over the payments. At the end of five years, as stated in the contract, the buyer then purchased the house via a traditional mortgage for a predetermined price. The sellers had moved out of town, couldn't sell their house and didn't want to continue to make two house payments. The buyer had filed for bankruptcy a few years prior, so was unable to purchase through a traditional mortgage. This was a win/win, as both parties benefited.

Before you make any purchase or any agreement, discuss all of your options with a qualified, experienced mortgage professional.