A lot of people holding a private mortgage note are not fully aware and probably ask themselves often how to sell my mortgage note.
What is a Mortgage Note?
There are a lot of consideration when it comes to this, however, you need to clarify if you actually sure you have a mortgage note. Many people and home owners have misunderstood the process of selling mortgage notes.
Create a Mortgage Note
Some made a mistake of finding a mortgage note buyer when they do not have the mortgage note in their hands yet. To put this simply is that, most people who own a property or a house are not aware that selling them the property to relieve them of the mortgage payments is the same idea of selling a mortgage note. That is not the case. This is not what a note buyer does.
A note buyer will be interested to buy your note if you are selling mortgage notes, but only if you have actually created a note.
How Does it Work?
This is a good example to give a clearer scenario. Considering you have a property, a house. One day you decide that you want to sell it on land contract or other creative seller financing method. Then you find a buyer who then moves in the house. There is no bank actions involved this is due to you becoming the bank by carrying the note.
So, you then create a note between you and the buyer. This type of note is structured so that the person making payments on the note (the person buying the home) will be making his payments directly to you. No bank involved. With this scenario you are holding a note that you can sell to a note buyer.
What is the Key To Selling My Mortgage Note?
Let’s say you are considering selling your mortgage note, here are a few factors that you should be aware of.
First, it is a normal situation that the note buyer will go ask for a discount on your note to buy it because there must be a potential profit in it for them.
Usually discounts will depend on several factors.
What is the Risk of Default?
If the case is like this; the person who is making the payments on the note has a poor credit, there will be a higher risk of default. And since the note buyer assumes the risk of note payment default after purchasing it from you, they will definitely ask for a steeper discount to buy your note.
On the other hand, if your note has generated a steady history of good payments and the payor on the note has a less risk of defaulting, then there is a possibility that you can get more for your note.
One fact of life is that money today definitely has bigger worth than money tomorrow for the simple reason that the purchasing power of money always goes down over time.
