LandCentral.com has made it possible for anyone to purchase land; everyone qualifies for easy financing. Finding the right property, at the right price, with affordable payments, has never been easier with the new and improved features on LandCentral.com. Despite the easy process LandCentral has created, there are still important land contract terms that you should understand.
Here is a sample of our Land Sale Contract to get you acquainted with these terms:
(click image above to see a full contract)
Here are the definitions of some terms within the contract, as well as some of the more common land contract terms you will hear:
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Principal
The original amount of a debt on which interest is calculated.
Principal Payment – sometimes called an “extra” payment; it is a payment that goes only towards reducing the loan’s principal balance. Making payments towards the principal in addition to your regular monthly payment reduces the amount of interest paid over time. Principal payments allow you to pay off your loan more quickly.
Principal Balance – The amount of the original debt that is still owed. Not to be confused with Payoff Balance. -
Interest
The price paid for borrowing money. Interest is calculated as a percentage of the principal balance.
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Payoff Balance
The amount required to pay off a loan. The payoff balance is the remaining principal balance plus any interest accrued since the last payment. This includes accrued late fees, if there are any. The payoff balance will change daily.
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Grace Period
The window of time after your payment is due that you can still make your payment and not be charged a late fee. Example: if your payment is due on the 1st of each month, and you have a 15-day grace period, you will not be charged a late fee as long as you pay by the 15th of each month.
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Impounds
Money collected for the payment of the land that is not part of the loan. Property taxes are an example of impounds.
Understanding land contract terms and what your money is paying for is of the utmost importance. LandCentral has a finance team dedicated to helping you with your account questions, so don’t hesitate to call or email any and all questions you may have.