Completion of the purchase

As indicated above, the buyer must complete the purchase within the prescribed loan term. Completing the purchase entails a mortgage loan to refinance the installment contract, which is essentially a seller-financing arrangement.

The mortgage loan that the buyer will need is a refinance, with some adjustments. Because it is a refinance, no down payment is required. The property's available equity can be used for the down payment and closing costs.

For refinances, however, most mortgage lenders require the installment contract to be "seasoned" at least 6-12 months. If that seasoning requirement is not met, most lenders will treat the financing as a purchase loan and require an actual down payment.

The buyer must pay the monthly installment payments with a personal check, and then retain the canceled checks. The lender will require copies of the canceled checks to support the buyer's credit history and ensure that the buyer has been making the monthly payments on time. In a sense, the installment contract becomes a training regimen for first-time home buyers or investors. As such, it is crucial that the buyer make all contract payments on timeā€”in addition to maintaining overall good credit.

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