Selling Mortgage Notes

What Are Mortgage Notes & Can They Be Sold? Understanding the overall mortgage note sales process can help you identify reputable buying companies and get the highest value from the sale. What Is a Mortgage Note? A mortgage note, also known as a promissory note, provides a detailed loan agreement for purchasing real estate. Typically, mortgage notes have a 5-year duration during which the buyer applies for a bank loan to repay the seller. Some sellers - especially those with commercial property - view this arrangement as a long-term strategy for tax benefits, consistent income and collateral for future ventures. As time goes on, private mortgage holders may choose to sell their mortgage notes for immediate cash. There are three major types of mortgage notes:

1. Secured Notes
2. Institutional Notes
3. Private Notes

Common Reasons People Sell Mortgage Notes Rebalancing your portfolio can be beneficial for risk reduction or estate planning. Additionally, selling your mortgage note can provide you with a lump sum of cash to fulfill various needs such as purchasing property, covering college tuition, paying medical bills or exploring new investment opportunities. The funds obtained from selling a mortgage note offer flexibility as there are no limitations on how the money can be spent. How To Sell Your Mortgage Note In Five Steps

1. Determine your note's value
2. Find a buyer
3. Negotiate the terms
4. Prepare the paperwork
5. Close the sale

Remember that you have options when selling your private mortgage note. It's important to consult with a trusted financial advisor before deciding what type of sale will best serve your plans and benefit your financial strategy. PRO TIP: The price for your mortgage note will be determined by several factors, including the note terms, the borrower's creditworthiness, the property's value and the current market conditions for real estate in the property's area.  The property may have changed since the mortgage note was first issued, so the buying entity will want a current appraisal. Most reputable buying companies will pay for that appraisal themselves. How To Find a Buyer What Happens After When searching for a mortgage note buyer, focus on those interested in your specific type of note. While higher offers may be enticing, prioritize reputable buyers with verified expertise over questionable ones, even if their offer is slightly lower. Additionally, ensure the buyer is licensed by your state's Bureau of Real Estate and seek advice from a trusted financial advisor before making any decisions. After you sell your mortgage note, you and your buyer must send the borrower a letter of notice informing them of the sale. The notice must be issued at least 15 days before you finalize a sale.