Real Estate Questions
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Real Estate Questions
Call or Text 63-634-1766
MinnesotaInvestors.com, Inc.

Contract for Deed Minimum Interest Rate

Contract for Deed Minimum Interest Rate

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This article is about the minimum interest rate that can be charged when you sell a contract for deed.
Some will call this the imputed interest rate as decided and updated by the IRS. We hope to discuss
what these numbers mean and how to utilize it in your contract for deed transactions.  A seller will
sometimes decide to charge less interest for his contract for deed to get more buyers interested,
then the seller will charge more for the property.  If a buyer and seller want to research the imputed
interest rate that is allowable they can just verify this on the IRS website or check with an attorney,
possibly one that specializes in tax law.  Many homeowners want to sell a home based on an
interest rate that allows them some monthly cash flow where the buyer's monthly payment is over
what the home owners monthly payment is with their lender.  Some homeowners own their house
free and clear, so it's almost all cash flow after home owner's insurance, property taxes, and some
monthly maintenance of the property.
    Buyers will notice a great advantage of buying a contract for deed vs rent to own and vs renting.
Even if a seller offers a very inexpensive and cheap interest rate to make it affordable for the buyer,
the buyer eventually will need to afford the home loan and interest rate that comes with that.
The buyer will have a balloon term that they need to get a refinance by.  The seller is looking for a
payoff of the purchase price and their home loan if they have one.  When the buyer and seller
think they know what the interest rate will be, they should verify the monthly payment by the
payment calculator.  It will make a difference later on, on how the interest is handled long term
by using an amortized or interest only only table.  One of our real estate agents will be able to assist
you with this process.
    Buyers who would like to see contract for deed homes for sale with photos and property details
are able to do this online.  Two articles that I feel is related to this one is the one that explains
the interest deduction that the buyer will have the benefit of via the 1098 interest form he/she gets
at the end of the year for taxes.  Also I wrote an article based on the interest rate that the buyer
and seller agree upon with the help of the agent.  This interest rate and monthly fee all plays a part
in the overall costs involved which will one of the questions, to ask our agent, when they fill out
the paperwork.  Our agents are here by email, text message or phone to answer any questions
that you may have, so we hope that you contact one of them sometimes soon when you are ready.
  If you want to read an article about Minnesota homes for sale, you may read my article by clicking
on my link right here: contract for deed Minnesota.  My article will walk you through the process
(step by step) of how to work with a contract for deed agent here locally.

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