What is a seller financed note?

Mortgage notes that are held by individuals, not banks, are seller financed notes. These are also known as owner financed notes.

How did THE seller financed mortgage note GET created?

Owner financing is on the rise as more sellers agree to accept payments from buyers; in essence they are the bank. There are many reasons individuals agree to hold the financing for a buyer including:

  • Quick sale of the property

  • Monthly income from the note

  • No hassles of bank financing (fees, delays, or strict underwriting)

  • More qualified buyers

  • Property is hard to finance

FACTORS THAT AFFECT MORTGAGE NOTE VALUES

How is the value of a note determined?

The value of a note is affected by the down payment, interest rate, payment amount, and term as well as the buyer’s credit rating and payment history. The type, condition, and value of the property also impact the value of your note.

The time value of money, which makes payments due now more valuable than payments due in 20 to 30 years, also plays a role in the evaluation process. Generally, due to inflation, money in your pocket today is worth more now than later. All of these elements will be taken into consideration in determining the current value of your note.

what affects the value of an owner financed note?

Many of the items that affect the value of your note were determined at the time the property was sold. However, there are certain things that you can do now to make your note more valuable:

  • keep good records and copies of the payments received,

  • obtain a copy of the property insurance policy from the buyer each year; and

  • verify the property taxes are paid when they come due (usually twice a year)

    — OR —

  • for a monthly fee you can hire a third-party loan servicer and they will collect the payments, keep records, issue tax documents to the borrower, and escrow for taxes and insurance, and pay the bills when due.

is it possible to get a note appraised?

It is possible to have your mortgage note appraised, and we recommend having it done once a year because pricing may change based on market conditions.

A note appraisal reflects the current market value of the payments similar to what a real estate appraisal provides for real property. It shows what your future payments are worth in cash dollars today. The note appraisal is sometimes referred to as a “note analysis” or “quote”.

selling mortgage notes

WHO WOULD SELL THEIR Mortgage Note?

Circumstances change and many sellers would prefer cash today rather than small payments that trickle in each month. Below are a number of reasons why people have sold their mortgage note payments for cash:

  • Retirement

  • Taxes

  • Investment Opportunity

  • Expensive Medical Care

  • Vacation

  • College Tuition

  • Unexpected Financial Changes

  • Peace of Mind – no more worrying if the buyer is going to make late payments or having to foreclose

How will selling my note affect the payer?

The payer experiences no change in the way the payments are structured. The only change will be the address where the payments are mailed.

How will I be paid if I decide to sell my note?

The purchase price is paid in guaranteed funds (cashier’s check or wire transfer) upon receipt of the final transfer package and original documents.

We are happy to wire funds to the title company so you may exchange your original documents for the proceeds, assuring the safe and secure transfer of your valuable asset.

Can I sell all or part of my note?

We can purchase all or part of your remaining payments. Selling part of the payments allows you to receive a lump sum of cash up front, then payments when the note reverts back to you. We can even pay cash for a portion of each monthly payment.

Many people elect to sell just enough payments to meet their cash needs today and keep some of the future payments as an investment or nest egg. Always ask for an option that meets your needs.