5 Simple Steps to work with a Mortgage Note Buyer
We understand that most people sell their note to get access to capital. We also believe you shouldn’t have to work with a company you don’t like just to get a good price. Because of that, we’re willing to beat any written offer from a competitor.
Mortgage Note Buyer
With these FHA loans, though, came regulations. To qualify for FHA loans, the properties had to meet certain standards, and the borrower had to have certain credentials. A longer time to pay the loan back meant more risk, and the collateral on the loan, the property, needed to be in good enough condition that the lender could recoup its money if the borrower defaulted.
Private mortgage notes filled the void left behind by the FHA. Regulations left out a significant percentage of borrowers who didn’t have the credit history necessary to qualify for loans — and it also left out properties that were not in good enough condition to qualify for FHA loans.
Mortgage Note Buyers
Even today, some homeowners have properties they can’t afford to improve enough to meet FHA standards, so they offer homebuyers “seller-backed financing” through a private mortgage. This lets the previous homeowner get rid of an unsellable property, all with the benefit of a quicker sale process for the homebuyer. The new homeowner simply gives the down payment and payments directly to the buyer, who now isn’t stuck with an unsellable property.
What Is A Mortgage Note Buyer
If you have questions about what is a fair rate or want a recommendation for companies to work with, we’re here to help. When you call our hotline, you’ll be connected with financial experts who will listen to the specifics of your situation before making recommendations and answering any questions you have.
How to become a Mortgage Note Buyer
Offering owner financing has proven to be an excellent way to attract potential buyers for your property. We recommend, however, that you learn some fundamental elements of the business before becoming a mortgage lender. Continue for valuable insight into the benefits of owner financing and learn how to create a quality mortgage note investment.
It’s true, interest rate changes can affect the value of your mortgage notes — but that’s along with several other factors. If a note buyer tries to pressure you into a deal you’re not comfortable with, it’s probably a sign that you should get a quote elsewhere.
Who are Mortgage Note Buyers?
Mortgage note buyers are companies or investors with the capital to purchase a mortgage note. If someone is holding a private mortgage, these investors will give cash and take over receiving the monthly payments that were being paid to the previous owner. A mortgage note for these investors are home loans or mortgages that are secured by real estate. Mortgage notes could be anything from $10,000 to tens of millions of dollars.
Private mortgages also became popular to keep resources in a family or community. If one relative has a piece of property, he or she can sell it to a family member. That family member pays the private mortgage to the relative, who gets the benefit of the interest on the loan, instead of that money going to a bank.
Real Estate Note Buyers
The process is simple. Many companies are willing to buy your mortgage note and take on risk because these are collateral-backed securities. You will need the security you received when completing your financing, which is called a mortgage or trust deed.
Attorneys estimate that the documents belonging to as many as 50% of the mortgages made between 2001-2008 have been lost or destroyed, leading to demands by borrowers that the foreclosing party produce the note as evidence of the debt.
Working with Mortgage Note Buyers
Are you receiving monthly payments from a seller financed mortgage? Do you want to turn those payments into a lump sum cash payment? DB Real Estate will give you the 24/7 attention you deserve, and access to our network of mortgage buyers will insure that you get the best possible offer!
Private Mortgage Note Buyers
The market value of a privately-held mortgage note, deed of trust or land contract is determined by a number of characteristics unique to the note and property that secures it. In fact, each mortgage note is a unique investment and therefore has a unique market value. Because no two mortgage investments are alike, every note and mortgage needs to be priced on an individual basis. It is true in every case that the market value of a note will be an amount less than the outstanding balance due on it. It is incumbent on every note holder considering the sale of their note to thoroughly research their options and maximize the value they receive for it.
What is a Promissory Note?
A promissory note is a financial instrument that contains a written promise by one party to pay another party a definite sum of money either on demand or at a specified future date. A promissory note typically contains all the terms pertaining to the indebtedness by the issuer or maker to the note's payee, such as the amount, interest rate, maturity date, date and place of issuance, and issuer's signature. A mortgage note is a promissory note secured by a mortgage, deed of trust or trust deed. It is the fact mortgage notes are secured by specific real estate collateral that makes them salable. Without real estate as collateral a promissory note would simply be a written promise to pay and there would be few buyers for them.
Documents Need by your Note Buyer
- The Original Note
- The Security Agreement
- Original Sales Agreements
- Proof of Insurance
Just as people turned to private mortgages for different reasons, they turned to mortgage note buyers for several reasons. Those who utilized seller-backed financing no longer had to bear the risk of the loan. Plus, those who wanted to give a relative or community member a leg up toward ownership could feel good about what they did — but still get the cash they needed.
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 used to determine the value of your mortgage note:
Promissory Note Rules
In 2007 the United States mortgage market experienced a sudden and dramatic meltdown. Without notice mortgage originators across the country were forced to tighten their belts and stop creating sub-prime loans. Overnight a large group of potential home buyers were left with no place to secure mortgage financing. Then, in 2014 the new Dodd-Frank law went into effect placing additional restrictions on potential home buyers and further limiting the number of individuals who qualify for mortgage financing. Today, there are a staggering number of potential real estate buyers who can only look to the property seller for the financing they need.
Getting an Offer for your Mortgage Note or Promissory Note
Once you decide to work with a company that buys mortgage notes, you can call them or complete a form online to get an offer. Offers are based on the current market, an appraisal of the property, the terms of the note and the company’s competitive rates.
Most mortgage notes are for five years, during which time the buyer typically applies for a mortgage from banks and repays the seller using the bank loan. Some sellers — 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, get reliable monthly income and have an asset to use as collateral if things go sour.
Advantages of Mortgage Notes aka Promissory Notes
The advantage of a mortgage note over other investments is that a mortgage note will allow one to collect the interest on a monthly basis. There are no sales commissions or fees taken out of a mortgage note investment.
There are no restrictions on how someone can spend the money generated from selling a mortgage note. In addition, the process of selling a note in this market can be much smoother than a regular mortgage deal.
If you’re ready to sell your mortgage note but don’t know where to start, give us a call. Our financial experts will be able to answer any questions you have about the process, can make recommendations for mortgage note purchasing companies and may be able to provide you an offer over the phone.
What is a mortgage or Trust Deed?
If you own a private mortgage or deed of trust, The Mortgage Buyer can convert all or any portion of your future payments into cash. There are no fees or costs for the person selling their note and we take care of all the work. To learn more about selling your mortgage note call one of the country’s leading mortgage buyers at (800) 618-2485. Our President, John Avenia, will answer your questions, explain the factors that determine the market value of your note and provide a no-cost, no-obligation purchase proposal for your important asset. If you would prefer to receive a purchase proposal without calling us you can do so easily and confidentially by completing our online mortgage buyers form.
What Do Note Buyers Purchase?
Note buyers can buy notes on nearly any type of property, though owner-occupied single family houses tend to get the best pricing. A note buyer will offer a certain price based on their perceived risk factors, which include the amount of equity in the property, the payer's credit, the type and condition of the property and surrounding area, elements of the note, etc. Most U.S.-based note buyers will only buy in the 50 states, though some do advertise as being able to buy notes in Canada.