What Is an REC Mortgage?

The REC mortgage is one option for financing a home purchase.

If you are purchasing a home, you have many financing options. One option is the REC, or real estate contract. Buyers and sellers frequently find the REC offers greater flexibility than traditional institutional financing.

Terms

Payment terms may be similar to institutional mortgages or may include special provisions. Often they call for payments based on a lengthy term but with a final large payment, called a balloon, due much sooner. This allows the buyer to establish equity and then refinance the balance at a later date.

Process

An escrow agent or attorney will normally handle the drawing up of the contractual agreement, and will monitor the transaction. The buyer receives right of possession upon execution and recording of the contract.

Fulfillment

The buyer receives legal title to the property upon completion of the payment process and recording of the deed. If the property is refinanced, the deed will continue to be held by the new mortgage holder.

References

• University of Minnesota: Mortgages and Contracts for Deed
• "Winning the Home Buying Game"; Melvin Barlow; 2003

Resources

• California Department of Real Estate: Real Estate Guide
• North Carolina State University: Negotiating for Your House