There are a number of methods to finance real estate transaction. The most common is a mortgage. This is a loan which transfers an interest in the land as collateral against repayment. The borrower typically pays the mortgage in installments including both interest and principal payments. If the borrower fails to pay, the mortgage's owner can foreclose on the property. In a foreclosure, the lender can declare that the entire debt is due immediately. If this is not repaid, the lender can sell the property to pay the remainder of the debt. If a foreclosure is threatened, a borrower should consult with an experienced real estate attorney to protect his or her interests and resolve the situation. A borrower can stay in the house for a period of time without paying the mortgage payment once foreclosure starts.
You can also purchase property on a private installment contract. This contract has more danger in that if you miss a payment, the seller can forfeit the contract and retain all payments made and get control of the property again. Contract sales work well for those whose credit is damaged but they will pay a higher interest rate for someone serving as "the bank." Additionally, contracts need to include clauses to allow for early prepayment, or the buyer may not be able to refinance into a better interest rate in the future.
If you would like to schedule a initial consultation contact an Iowa real estate attorney, representing clients in New Hampton, Iowa at the Dillon Law P.C. Give us a call at (563) 578-1850 or complete our inquiry form.