I was wondering if the payments we made during a 12 month period have to be taken off of the price o
Question: I was wondering if the payments we made during a 12 month period have to be taken off of the price of our house in Chikaming, Michigan, that we are buying on a land contract. Also how much interest can be charged on a land contract in the state of Michigan.
Answer: I can answer your question generally. A land contract seller is generally allowed to charge 11% interest in Michigan. On most land contracts you only receive credit against the purchase price for a small portion of your payment amount, just like payments on a mortgage. Most of the money you pay is for interest, with the balance of the payment applied to principle reduction on the land contract price. I hope this helps.