Contract for Deed

Remember: Both have pros and cons, so research and consult a professional. Always read and understand the terms before signing any contract.

Minnesota has resources, including help to cover costs for down payments and closing costs.

Mortgage

• You borrow money from a lender to buy a home.
• Typically requires a down payment.
• You make monthly payments with interest.
• You own the home from day one.
• You can build equity and get tax benefits.
• You have foreclosure rights if you are late or miss a payment.

Contract for Deed

• You agree to buy the home from the seller over time.
• You make regular payments to the seller.
• You don’t own the home until the contract is complete. This often requires a large lump sum, or ‘balloon’ payment.
• If you fail to make any of the payments, the seller can cancel the contract and evict you quickly.
• Generally higher interest rates.
• Limited tax benefits, and you may not be able to access equity.

Which Is Right for You?

• Choose a mortgage if you want ownership and tax benefits.
• Read the terms carefully. Always read and understand the terms before signing any contract.
• Get help if needed.