Selling Mortgage Notes

People who get money from a mortgage note they hold for a home, business or piece of property can sell their notes to get money up front rather than waiting for future payments. If you owner-financed a mortgage and need access to more immediate cash, we can help.

The traditional mortgage for a homeowner involves a bank, credit union or another financial institution that agreed to loan money in exchange for a long-term payment plan. Homeowners or business owners agree to make monthly payments for five, 10, 15 or 30 years or more. value o But some house and property owners have the financial ability to strike their own deals when they sell and agree to write their own mortgage note for their buyer. Although terms of the deal are similar, the difference is the buyer sends payments to the seller and not to the bank.

Essentially, this is a private mortgage note — completed without the hassle or fees of working with a bank. For buyers who can’t afford to make a purchase outright, they will typically have five years to repay the owner, during which time they can find an institution to offer a traditional loan. Buyers then provide a down payment and then monthly installments with interest for a specific term.

Some investors — particularly those with commercial property — see this kind of deal as a long-term play: they can depreciate the property over time for tax benefits and they can apply future payments to their balance sheet. Sellers reap reliable monthly income and, if things go sour, still have an asset they have as collateral.

On paper, this seems like a win-win for buyer and seller.

Getting Rid of Your Mortgage Notes

Over the time, though, circumstances change. What works for sellers today might not work for them later.

Private mortgage holders sometimes regret holding a long-term note for their property. They find themselves locked into a long-term deal with little or no wiggle room to get rid of the note or to get more money from the buyer. (Buyers also sometimes regret agreeing to let a non-bank hold their mortgage and can let the seller know it.)

If note holders need money now, they always have the option to sell their mortgage note. In the world of real estate, private mortgage buyers are considered an emerging market.

Why Do People Sell Mortgage Notes?

Private mortgage holders sell their notes for a variety of reasons, most of which have to do with getting money to take care of things they need to handle now. Selling the mortgage provides them with a lump-sum payment. Examples include:

  • Quick access to a lump sum of cash
  • Paying off debt
  • Making retirement affordable
  • Using the money to invest with greater earning potential
  • Handling medical bills
  • Paying college tuition
  • Buying a house

There are no restrictions on how someone can spend the money generated from selling a mortgage note. In addition, the process of selling a property in this market can be much smoother than the regular mortgage deal.

How Does the Selling of Mortgage Notes Work?

The process is simple. We are willing to take on the risk as this is a collateral-backed security. You will need the security you received when completing your financing, called a mortgage or trust deed.

Complete our form using this information and we will give you an offer based on the current market, an appraisal of the property, the terms of the note and our competitive rates.

While fees for using a real estate attorney can cost you thousands, we directly fund you using our resources to give you a competitive rate. We directly provide you cash without a middle man.

Selling Options

You are not limited to the amount you have to sell. We are flexible. Decide from one of these three options for getting capital for your notes.

  • Sell all your payments
  • Sell a portion of your payments
  • Sell a percentage of each scheduled payment

How Much is my Note Worth?

You will not be getting the exact principal from your mortgage, but you can still receive a large offer. To help you understand how much money you will receive for your payments, here are the factors we use to determine the worth of your mortgage note.

  • Underwriting pay history (credit rating of the borrower)
  • Property appraisal
  • Clear title
  • First position
  • Date, Amount and Interest Rate of Remaining Payments
  • Length of Mortgage Terms
  • Down Payment Amount Placed on Note

You can find most of this information on your promissory note and deed of trust.

Tips for Getting the Best Value from Your Mortgage Sale

Not all mortgage notes have the same value. While some are difficult to sell, others can be purchased with a low discount rate, which means you get more money. Here are some insider industry tips for getting the best value from your notes:

If you have questions about any of these tips or want an estimate on your mortgage notes, call us today

  • Contracts which include a home or business as well as land are more likely to be approved.
  • You will often receive more value if you sell only a portion of your notes.
  • Get higher value when selling payments due in the next few years.
  • If your note has a shorter term overall, you receive a greater cash value on it.
  • It’s easier to sell notes with clear terms in the deed and promissory note.
  • When the market is dominated by low interest rates, the value of your mortgage is increased.
  • If a borrower has missed note payments, it will be more difficult to sell notes.
  • If a borrower has excellent credit, your discount rate will be smaller. We will not use your credit to determine the amount offered.

If you have questions about any of these tips or want an estimate on your mortgage notes, contact us today.

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